Question 1

The term "Retained Earnings" is best explained by which of the following statements?

Accepted Answer

A)  Money set aside for the redemption of bonds payable. 
B)  A measure of equity generated by a corporation through its operating activities. 
C)  Cash retained in a separate bank account designated for emergency uses. 
D)  The difference between total revenue and total expenses in an accounting period. 
A)  Money set aside for the redemption of bonds payable. 
B)  A measure of equity generated by a corporation through its operating activities. 
C)  Cash retained in a separate bank account designated for emergency uses. 
D)  The difference between total revenue and total expenses in an accounting period.

Question 2

Establishing a sole proprietorship generally requires the owner to get a charter from the state government.

Accepted Answer

A) True 
 B)False

Question 3

On February 2, 2014, Barker's Pool Supply Corporation issued 900 shares of no-par stock for $7 per share. Within two hours of the issue, the stock's price jumped on the UMSL stock exchange to $11 per share. Which of the following answers describes the effect of the February 2, 2014 transaction?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 4

Hill Country Corporation has 90,000 shares of $10 par value common stock issued and outstanding. If Hill Country Corporation issued a 2-for-1 stock split, what dollar amount would be shown for common stock on the balance sheet after the stock split?

Accepted Answer

Before split: 90,000

Question 5

On June 10, 2014 Thetford Builders, Inc., a publicly traded company, announced that it had been awarded a contract to build a football stadium at a contract price of $500 million. This contract would increase its projected revenues by 25% over the next three years. Which of the following statements is correct in regards to this announcement?

Accepted Answer

A)  The market price of Thetford's stock will probably be higher on June 11, 2014 than on June 10. 
B)  Thetford's net cash flow from operations will increase by 25% over the next three years. 
C)  Thetford's total assets should be increased by $500 million on June 10, 2014 to recognize this contract. 
D)  Thetford's net income will increase by 25% over the next three years. 
A)  The market price of Thetford's stock will probably be higher on June 11, 2014 than on June 10. 
B)  Thetford's net cash flow from operations will increase by 25% over the next three years. 
C)  Thetford's total assets should be increased by $500 million on June 10, 2014 to recognize this contract. 
D)  Thetford's net income will increase by 25% over the next three years.

Question 6

When a company purchases treasury stock:

Accepted Answer

A)  total equity decreases. 
B)  cash flow from investing activities decreases. 
C)  total assets are unaffected. 
D)  total assets increase. 
A)  total equity decreases. 
B)  cash flow from investing activities decreases. 
C)  total assets are unaffected. 
D)  total assets increase.

Question 7

At the time that Stellar Company issued a 2-for-1 stock split, the company had 1,000 shares of $5 par value common stock outstanding. Stockholders' equity also included $14,000 of additional paid in capital in excess of par value and $20,000 of retained earnings. Immediately after the stock split,

Accepted Answer

A)  the balance in the common stock account would be $10,000. 
B)  the amount of paid-in capital would be $20,000. 
C)  the balance in the retained earning account would be $15,000. 
D)  the balance in the common stock account would be $5,000. 
A)  the balance in the common stock account would be $10,000. 
B)  the amount of paid-in capital would be $20,000. 
C)  the balance in the retained earning account would be $15,000. 
D)  the balance in the common stock account would be $5,000.

Question 8

What is the meaning of "par value" of stock?

Accepted Answer

"Par value" is an arbitrary value assign

Question 9

Which of the following statements is a reason why a company would buy treasury stock?

Accepted Answer

A)  because management believes the market price of stock is undervalued 
B)  to have stock available to issue to employees in stock option plans 
C)  to avoid a hostile takeover 
D)  all of these are reasons a company would buy treasury stock 
A)  because management believes the market price of stock is undervalued 
B)  to have stock available to issue to employees in stock option plans 
C)  to avoid a hostile takeover 
D)  all of these are reasons a company would buy treasury stock

Question 10

During 2014, the Hartnett Corporation and the Chapel Corporation reported net incomes of $100,000 and $250,000 respectively. Both companies had 200,000 shares of common stock issued and outstanding. At December 31, 2014, the market price per share of Hartnett's stock was $31 and Chapel's' stock was $35.
Required:
a) Calculate the price-earnings ratio for each company.
b) Based on the price-earnings ratios computed in part (a), which company do investors believe has more potential for future income growth? State your reason.

Accepted Answer

a) Earnings-per-share:
Hartnett-$100,000

Question 11

A reason often given for a stock split is:

Accepted Answer

A)  to protect the interest of creditors. 
B)  to reduce the market price of the stock. 
C)  to increase the par value of the stock. 
D)  to absorb the treasury stock. 
A)  to protect the interest of creditors. 
B)  to reduce the market price of the stock. 
C)  to increase the par value of the stock. 
D)  to absorb the treasury stock.

Question 12

In which section of the balance sheet would Treasury Stock be reported?

Accepted Answer

Stockholde

Question 13

The Garza Company was started on January 1, 2012 as a sole proprietorship. The initial investment from J. Garza, the owner, was $40,000. During 2012, the business earned $30,000 in cash revenue and paid $20,000 in cash expenses. Ms. Garza withdrew from the business $2,000 for her personal use. Using the above information, prepare an income statement, a capital statement, and a balance sheet for the Garza Company.

Accepted Answer

The answer of The Garza Company was started on January...

Question 14

Tyrone Gonzales started a sole proprietorship by depositing $30,000 cash in a business checking account. During the accounting period the business earned $16,000 of net income and Gonzales withdrew $10,000 cash from the business. Based on this information, at the end of the accounting period, Gonzales' capital account contained a balance of:

Accepted Answer

A)  $28,000. 
B)  $30,000. 
C)  $34,000. 
D)  $36,000. 
A)  $28,000. 
B)  $30,000. 
C)  $34,000. 
D)  $36,000.

Question 15

A corporation should recognize losses but not gains related to treasury stock transactions.

Accepted Answer

A) True 
 B)False

Question 16

Corporations are more heavily regulated by governments than are sole proprietorships and partnerships.

Accepted Answer

A) True 
 B)False

Question 17

Indicate how each of the following transactions affects the financial statements model, below:
a) Issued 40,000 shares of common stock with a $20 par value for cash of $25 per share.
b) Purchased 400 shares of treasury stock (common stock) at $30 per share.
c) Resold 100 shares of the treasury stock at $35 per share.

Accepted Answer

The answer of Indicate how each of the following transactions...

Question 18

Liu Corporation's balance sheet reflected the following information.

Accepted Answer

@#IMG-DLM& Assuming all the stock was issued in a

Question 19

Which of the following is a reason why a corporation may choose not to pay cash dividends?

Accepted Answer

A)  The board and management prefer to reinvest all net income for future growth. 
B)  The corporation does not have adequate Cash. 
C)  The corporation does not have adequate Retained Earnings. 
D)  All of these are valid reasons not to pay dividends. 
A)  The board and management prefer to reinvest all net income for future growth. 
B)  The corporation does not have adequate Cash. 
C)  The corporation does not have adequate Retained Earnings. 
D)  All of these are valid reasons not to pay dividends.

Question 20

Double taxation is a significant disadvantage of the partnership form of business organization.

Accepted Answer

A) True 
 B)False

The term "Retained Earnings" is best explained by which of the following statements?

Establishing a sole proprietorship generally requires the owner to get a charter from the state government.

On February 2, 2014, Barker's Pool Supply Corporation issued 900 shares of no-par stock for $7 per share. Within two hours of the issue, the stock's price jumped on the UMSL stock exchange to $11 per share. Which of the following answers describes the effect of the February 2, 2014 transaction?

Hill Country Corporation has 90,000 shares of $10 par value common stock issued and outstanding. If Hill Country Corporation issued a 2-for-1 stock split, what dollar amount would be shown for common stock on the balance sheet after the stock split?

When a company purchases treasury stock:

At the time that Stellar Company issued a 2-for-1 stock split, the company had 1,000 shares of $5 par value common stock outstanding. Stockholders' equity also included $14,000 of additional paid in capital in excess of par value and $20,000 of retained earnings. Immediately after the stock split,

What is the meaning of "par value" of stock?

Which of the following statements is a reason why a company would buy treasury stock?

A reason often given for a stock split is:

In which section of the balance sheet would Treasury Stock be reported?

A corporation should recognize losses but not gains related to treasury stock transactions.

Corporations are more heavily regulated by governments than are sole proprietorships and partnerships.

Liu Corporation's balance sheet reflected the following information.

Which of the following is a reason why a corporation may choose not to pay cash dividends?

Double taxation is a significant disadvantage of the partnership form of business organization.

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters

Exam 8: Proprietorships, Partnerships, and Corporations

The term "Retained Earnings" is best explained by which of the following statements?

Establishing a sole proprietorship generally requires the owner to get a charter from the state government.

On February 2, 2014, Barker's Pool Supply Corporation issued 900 shares of no-par stock for $7 per share. Within two hours of the issue, the stock's price jumped on the UMSL stock exchange to $11 per share. Which of the following answers describes the effect of the February 2, 2014 transaction?

Hill Country Corporation has 90,000 shares of $10 par value common stock issued and outstanding. If Hill Country Corporation issued a 2-for-1 stock split, what dollar amount would be shown for common stock on the balance sheet after the stock split?

When a company purchases treasury stock:

At the time that Stellar Company issued a 2-for-1 stock split, the company had 1,000 shares of $5 par value common stock outstanding. Stockholders' equity also included $14,000 of additional paid in capital in excess of par value and $20,000 of retained earnings. Immediately after the stock split,

What is the meaning of "par value" of stock?

Which of the following statements is a reason why a company would buy treasury stock?

A reason often given for a stock split is:

In which section of the balance sheet would Treasury Stock be reported?

A corporation should recognize losses but not gains related to treasury stock transactions.

Corporations are more heavily regulated by governments than are sole proprietorships and partnerships.

Liu Corporation's balance sheet reflected the following information.

Which of the following is a reason why a corporation may choose not to pay cash dividends?

Double taxation is a significant disadvantage of the partnership form of business organization.

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters