Question 1

A corporation can issue two kinds of stock - common and preferred.

Accepted Answer

A) True 
 B)False

Question 2

Common stock always carries a preference for receiving dividends over preferred stock.

Accepted Answer

A) True 
 B)False

Question 3

A corporation paid a cash dividend of $0.07 per share during the current year. It had 550,000 common shares outstanding at year-end, its current year earnings per share was $3.85, and the stock's year-end market price was $17.50 per share. Calculate the company's dividend yield.

Accepted Answer

The answer of A corporation paid a cash dividend of...

Question 4

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Accepted Answer

A) True 
 B)False

Question 5

Given the following information about a corporation's current year activities, compute the retained earnings for the current year.

Accepted Answer

The answer of Given the following information about a corporation's...

Question 6

A corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

Accepted Answer

A)  A debit to Organization Expenses for $3,000. 
B)  A debit to Organization Expenses for $5,000. 
C)  A credit to Common Stock for $5,000. 
D)  A credit to Paid-in Capital in Excess of Par Value, Common Stock for $5,000. 
E)  A debit to Paid-in Capital in Excess of Par Value, Common Stock for $2,000. 
A)  A debit to Organization Expenses for $3,000. 
B)  A debit to Organization Expenses for $5,000. 
C)  A credit to Common Stock for $5,000. 
D)  A credit to Paid-in Capital in Excess of Par Value, Common Stock for $5,000. 
E)  A debit to Paid-in Capital in Excess of Par Value, Common Stock for $2,000.

Question 7

A company paid $2.10 in dividends. Its earnings per share is $5.40, and its stock price is $120 per share. The dividend yield equals 38.9%.
$2.10/$120 = 1.75%

Accepted Answer

A) True 
 B)False

Question 8

A corporation declared and issued a 15% stock dividend on November 1. The following information was available immediately prior to the dividend:   The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

Accepted Answer

A)  $45,000. 
B)  $135,000. 
C)  $(45,000). 
D)  $(135,000). 
E)  $0. 
A)  $45,000. 
B)  $135,000. 
C)  $(45,000). 
D)  $(135,000). 
E)  $0.

Question 9

Dividend yield is defined as the market price per share of a company's stock divided by its earnings per share.

Accepted Answer

A) True 
 B)False

Question 10

The number of shares that a corporation's charter allows it to sell is referred to as:

Accepted Answer

A)  Issued stock. 
B)  Outstanding stock. 
C)  Common stock. 
D)  Preferred stock. 
E)  Authorized stock. 
A)  Issued stock. 
B)  Outstanding stock. 
C)  Common stock. 
D)  Preferred stock. 
E)  Authorized stock.

Question 11

Minimum legal capital requirements are intended to protect creditors by requiring a minimum level of legal minimum.

Accepted Answer

A) True 
 B)False

Question 12

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

Accepted Answer

A)  Stock dividend. 
B)  Stock subscription. 
C)  Premium on stock. 
D)  Discount on stock. 
E)  Treasury stock. 
A)  Stock dividend. 
B)  Stock subscription. 
C)  Premium on stock. 
D)  Discount on stock. 
E)  Treasury stock.

Question 13

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

Accepted Answer

A) True 
 B)False

Question 14

The following selected transactions took place during the current year for a company:   (a) Prepare the journal entries for these transactions.
(b) If Retained Earnings had a $75,000 credit balance on January 1, calculate its year-end
balance as of December 31.

Accepted Answer

The answer of The following selected transactions took place during...

Question 15

A liability for dividends exists:

Accepted Answer

A)  When cumulative preferred stock is sold. 
B)  On the date of declaration. 
C)  On the date of record. 
D)  On the date of payment. 
E)  For dividends in arrears on cumulative preferred stock. 
A)  When cumulative preferred stock is sold. 
B)  On the date of declaration. 
C)  On the date of record. 
D)  On the date of payment. 
E)  For dividends in arrears on cumulative preferred stock.

Question 16

Unpaid and undeclared preferred dividends are called dividends in arrears.

Accepted Answer

A) True 
 B)False

Question 17

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends, the unpaid amount is called __________________________.

Accepted Answer

The answer of When preferred stock is cumulative and the...

Question 18

The statement of changes in stockholders' equity:

Accepted Answer

A)  Is part of the statement of retained earnings. 
B)  Shows only the ending balances in stockholders' equity. 
C)  Describes changes in paid-in capital and retained earnings subcategories. 
D)  Does not include changes in treasury stock. 
E)  Is reported by very few companies. 
A)  Is part of the statement of retained earnings. 
B)  Shows only the ending balances in stockholders' equity. 
C)  Describes changes in paid-in capital and retained earnings subcategories. 
D)  Does not include changes in treasury stock. 
E)  Is reported by very few companies.

Question 19

A company issued 7% preferred stock with a $100 par value. This means that:

Accepted Answer

A)  Preferred shareholders have a guaranteed dividend. 
B)  The amount of the potential dividend is $7 per year per preferred share. 
C)  Preferred shareholders are entitled to 7% of the annual income. 
D)  The market price per share will approximate $100 per share. 
E)  Only 7% of the total paid-in capital can be preferred stock. 
A)  Preferred shareholders have a guaranteed dividend. 
B)  The amount of the potential dividend is $7 per year per preferred share. 
C)  Preferred shareholders are entitled to 7% of the annual income. 
D)  The market price per share will approximate $100 per share. 
E)  Only 7% of the total paid-in capital can be preferred stock.

Question 20

A company reported earnings per share of $9.75, paid a $6.00 cash dividend per share to preferred shareholders, and paid a $0.54 cash dividend per share to common shareholders. There were 1,000 shares of preferred stock outstanding and 6,000 shares of common stock outstanding during the year, and the market price per share of common stock was $45. Calculate the company's dividend yield for common stock.

Accepted Answer

The answer of A company reported earnings per share of...

Exam 13: Accounting for Corporations

A corporation can issue two kinds of stock - common and preferred.

Common stock always carries a preference for receiving dividends over preferred stock.

A corporation paid a cash dividend of $0.07 per share during the current year. It had 550,000 common shares outstanding at year-end, its current year earnings per share was $3.85, and the stock's year-end market price was $17.50 per share. Calculate the company's dividend yield.

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Given the following information about a corporation's current year activities, compute the retained earnings for the current year.

A company paid $2.10 in dividends. Its earnings per share is $5.40, and its stock price is $120 per share. The dividend yield equals 38.9%. $2.10/$120 = 1.75%

A corporation declared and issued a 15% stock dividend on November 1. The following information was available immediately prior to the dividend: The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

Dividend yield is defined as the market price per share of a company's stock divided by its earnings per share.

The number of shares that a corporation's charter allows it to sell is referred to as:

Minimum legal capital requirements are intended to protect creditors by requiring a minimum level of legal minimum.

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

The following selected transactions took place during the current year for a company: (a) Prepare the journal entries for these transactions. (b) If Retained Earnings had a $75,000 credit balance on January 1, calculate its year-end balance as of December 31.

A liability for dividends exists:

Unpaid and undeclared preferred dividends are called dividends in arrears.

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends, the unpaid amount is called __________________________.

The statement of changes in stockholders' equity:

A company issued 7% preferred stock with a $100 par value. This means that:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

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