Question 1

The stock dividends distributable account is listed in the current liability section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a

Accepted Answer

A)  liquidating dividend 
B)  stock split 
C)  stock option 
D)  preferred dividend 
A)  liquidating dividend 
B)  stock split 
C)  stock option 
D)  preferred dividend

Question 3

Stockholders' equity

Accepted Answer

A)  is usually equal to cash on hand 
B)  includes paid-in capital and liabilities 
C)  includes retained earnings and paid-in capital 
D)  is shown on the income statement 
A)  is usually equal to cash on hand 
B)  includes paid-in capital and liabilities 
C)  includes retained earnings and paid-in capital 
D)  is shown on the income statement

Question 4

The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder.

Accepted Answer

A) True 
 B)False

Question 5

When common stock is issued in exchange for land, the land should be recorded in the accounts at the par amount of the stock issued.

Accepted Answer

A) True 
 B)False

Question 6

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

Accepted Answer

A)  decrease total liabilities and stockholders' equity. 
B)  increase total expenses and total liabilities. 
C)  increase total assets and stockholders' equity. 
D)  decrease total assets and stockholders' equity. 
A)  decrease total liabilities and stockholders' equity. 
B)  increase total expenses and total liabilities. 
C)  increase total assets and stockholders' equity. 
D)  decrease total assets and stockholders' equity.

Question 7

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

Accepted Answer

A)  $ 60,000 
B)  $ 20,000 
C)  $120,000 
D)  $100,000 
A)  $ 60,000 
B)  $ 20,000 
C)  $120,000 
D)  $100,000

Question 8

Which of the following is not a right possessed by common stockholders of a corporation?

Accepted Answer

A)  the right to vote in the election of the board of directors 
B)  the right to receive a minimum amount of dividends 
C)  the right to sell their stock to anyone they choose 
D)  the right to share in assets upon liquidation 
A)  the right to vote in the election of the board of directors 
B)  the right to receive a minimum amount of dividends 
C)  the right to sell their stock to anyone they choose 
D)  the right to share in assets upon liquidation

Question 9

What is the total stockholders' equity based on the following data?

Accepted Answer

A)  $1,070,000 
B)  $1,005,000 
C)  $940,000 
D)  $565,000 
A)  $1,070,000 
B)  $1,005,000 
C)  $940,000 
D)  $565,000

Question 10

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is not true about a 2-for-1 split?

Accepted Answer

A)  Par value per share is reduced to half of what it was before the split. 
B)  Total contributed capital increases. 
C)  The market price will probably decrease. 
D)  A stockholder with ten shares before the split owns twenty shares after the split. 
A)  Par value per share is reduced to half of what it was before the split. 
B)  Total contributed capital increases. 
C)  The market price will probably decrease. 
D)  A stockholder with ten shares before the split owns twenty shares after the split.

Question 12

Match the following stockholders equity concepts to the most appropriate answer.

Accepted Answer

The answer of Match the following stockholders equity concepts to...

Question 13

Which of the following is not a prerequisite to paying a cash dividend?

Accepted Answer

A)  formal action by the board of directors 
B)  market value in excess of par value per share 
C)  sufficient cash 
D)  sufficient retained earnings 
A)  formal action by the board of directors 
B)  market value in excess of par value per share 
C)  sufficient cash 
D)  sufficient retained earnings

Question 14

If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000.

Accepted Answer

A) True 
 B)False

Question 15

A corporation issues 2,500 shares of common stock for $ 45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

Accepted Answer

A)  $25,000 
B)  $45,000 
C)  $20,000 
D)  $ 5,000 
A)  $25,000 
B)  $45,000 
C)  $20,000 
D)  $ 5,000

Question 16

Retained earnings represents past net incomes less past dividends, therefore any balance in this account would be listed on the income statement.

Accepted Answer

A) True 
 B)False

Question 17

A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

Accepted Answer

A)  increase, $100,000 
B)  increase, $350,000 
C)  decrease, $100,000 
D)  decrease, $350,000 
A)  increase, $100,000 
B)  increase, $350,000 
C)  decrease, $100,000 
D)  decrease, $350,000

Question 18

The initial owners of stock of a newly formed corporation are called directors.

Accepted Answer

A) True 
 B)False

Question 19

The number of shares of outstanding stock is equal to the number of shares authorized minus the number of shares issued.

Accepted Answer

A) True 
 B)False

Question 20

The authorized stock of a corporation

Accepted Answer

A)  must be recorded in a formal accounting entry. 
B)  only reflects the initial capital needs of the company. 
C)  is indicated in its by-laws. 
D)  is indicated in its charter. 
A)  must be recorded in a formal accounting entry. 
B)  only reflects the initial capital needs of the company. 
C)  is indicated in its by-laws. 
D)  is indicated in its charter.

Exam 13: Corporations: Organization, Stock Transactions, and Dividends

The stock dividends distributable account is listed in the current liability section of the balance sheet.

The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a

Stockholders' equity

The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder.

When common stock is issued in exchange for land, the land should be recorded in the accounts at the par amount of the stock issued.

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

Which of the following is not a right possessed by common stockholders of a corporation?

What is the total stockholders' equity based on the following data?

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

Which of the following statements is not true about a 2-for-1 split?

Match the following stockholders equity concepts to the most appropriate answer.

Which of the following is not a prerequisite to paying a cash dividend?

If paid-in-capital in excess of par/preferred stock is $30,000, preferred stock is $200,000, paid-in-capital in excess of par/common stock is $20,000, common stock is $525,000, and retained earnings is $105,000 (deficit), the total stockholders' equity is $880,000.

A corporation issues 2,500 shares of common stock for $ 45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

Retained earnings represents past net incomes less past dividends, therefore any balance in this account would be listed on the income statement.

A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

The initial owners of stock of a newly formed corporation are called directors.

The number of shares of outstanding stock is equal to the number of shares authorized minus the number of shares issued.

The authorized stock of a corporation

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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