Question 1

A premium on common stock:

Accepted Answer

A)  Is the amount paid in excess of par by purchasers of newly issued stock. 
B)  Is the difference between par value and issue price when the amount paid is below par. 
C)  Represents profit from issuing stock. 
D)  Represents capital gain on sale of stock. 
E)  Is prohibited in most states. 
A)  Is the amount paid in excess of par by purchasers of newly issued stock. 
B)  Is the difference between par value and issue price when the amount paid is below par. 
C)  Represents profit from issuing stock. 
D)  Represents capital gain on sale of stock. 
E)  Is prohibited in most states.

Question 2

A company reported $990,000 in net income for the current year. Total weighted-average number of common shares outstanding are 150,000 shares, and the year-end market price is $79.20 per common share. Calculate the company's price earnings ratio.

Accepted Answer

The answer of A company reported $990,000 in net income...

Question 3

On September 1, a corporation had 50,000 shares of $5 par value common stock, and $1,000,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

Accepted Answer

A)  Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000. 
B)  Debit Retained Earnings $750,000; credit Common Stock $750,000. 
C)  Debit Retained Earnings $250,000; credit Common Stock $250,000. 
D)  Debit Retained Earnings $250,000; credit Stock Split Payable $250,000. 
E)  No entry is made for this transaction. 
A)  Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000. 
B)  Debit Retained Earnings $750,000; credit Common Stock $750,000. 
C)  Debit Retained Earnings $250,000; credit Common Stock $250,000. 
D)  Debit Retained Earnings $250,000; credit Stock Split Payable $250,000. 
E)  No entry is made for this transaction.

Question 4

A corporation reported net income of $3,730,000 and paid preferred cash dividends of $100,000 during the current year. There were 600,000 weighted-average shares of common stock outstanding and the market price per common share was $88.33 at year-end. Calculate the company's price-earnings ratio.

Accepted Answer

The answer of A corporation reported net income of $3,730,000...

Question 5

Dividend payment involves three important dates. They are ____________________, _______________________, and __________________________.

Accepted Answer

The date of declarat

Question 6

The dividend yield is computed by dividing:

Accepted Answer

A)  Annual cash dividends per share by earnings per share. 
B)  Earnings per share by cash dividends per share. 
C)  Annual cash dividends per share by the market value per share. 
D)  Market price per share by cash dividends per share. 
E)  Cash dividends per share by retained earnings. 
A)  Annual cash dividends per share by earnings per share. 
B)  Earnings per share by cash dividends per share. 
C)  Annual cash dividends per share by the market value per share. 
D)  Market price per share by cash dividends per share. 
E)  Cash dividends per share by retained earnings.

Question 7

Shamrock Company had net income of $30,000. The weighted-average common shares outstanding were 8,000. The company sold 3,000 shares before the end of the year. There were no other stock transactions. The company's earnings per share is:

Accepted Answer

A)  $3.75. 
B)  $3.00. 
C)  $3.33. 
D)  $10.00. 
E)  $3.16. 
A)  $3.75. 
B)  $3.00. 
C)  $3.33. 
D)  $10.00. 
E)  $3.16.

Question 8

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

Accepted Answer

A) True 
 B)False

Question 9

A company paid $0.75 in cash dividends per share. Its earnings per share is $3.50, and its market price per share is $37.50. Its dividend yield equals:

Accepted Answer

A)  4.7%. 
B)  2.0%. 
C)  9.3%. 
D)  21.4%. 
E)  46.7%. 
A)  4.7%. 
B)  2.0%. 
C)  9.3%. 
D)  21.4%. 
E)  46.7%.

Question 10

Dividend yield is computed by dividing annual cash dividends per share by the market value per share.

Accepted Answer

A) True 
 B)False

Question 11

Preferred stock is often issued:

Accepted Answer

A)  To initiate or increase financial leverage. 
B)  To raise capital without sacrificing control. 
C)  To appeal to investors who believe that common stock is too risky. 
D)  To boost the return earned by common shareholders. 
E)  All of these. 
A)  To initiate or increase financial leverage. 
B)  To raise capital without sacrificing control. 
C)  To appeal to investors who believe that common stock is too risky. 
D)  To boost the return earned by common shareholders. 
E)  All of these.

Question 12

A company has 40,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $470,000, and the par value per common share is $10. The book value per share is:

Accepted Answer

A)  $0.09. 
B)  $1.75. 
C)  $10.00. 
D)  $11.75. 
E)  $47.50. 
A)  $0.09. 
B)  $1.75. 
C)  $10.00. 
D)  $11.75. 
E)  $47.50.

Question 13

The price-earnings ratio is calculated by dividing:

Accepted Answer

A)  Market value per share by earnings per share. 
B)  Earnings per share by market value per share. 
C)  Dividends per share by earnings per share. 
D)  Dividends per share by market value per share. 
E)  Market value per share by dividends per share. 
A)  Market value per share by earnings per share. 
B)  Earnings per share by market value per share. 
C)  Dividends per share by earnings per share. 
D)  Dividends per share by market value per share. 
E)  Market value per share by dividends per share.

Question 14

The amount of income earned per share of a company's outstanding common stock is known as:

Accepted Answer

A)  Restricted retained earnings per share. 
B)  Earnings per share. 
C)  Continuing operations per share. 
D)  Dividends per share. 
E)  Book value per share. 
A)  Restricted retained earnings per share. 
B)  Earnings per share. 
C)  Continuing operations per share. 
D)  Dividends per share. 
E)  Book value per share.

Question 15

Xtreme Sports has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Xtreme Sports also has $500,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, Xtreme Sports paid cash dividends of $30,000. This dividend should be distributed as follows:

Accepted Answer

A)  $8,000 preferred; $22,000 common. 
B)  $16,000 preferred; $14,000 common. 
C)  $7,500 preferred; $22,500 common. 
D)  $15,000 preferred; $15,000 common. 
E)  $0 preferred; $30,000 common. 
A)  $8,000 preferred; $22,000 common. 
B)  $16,000 preferred; $14,000 common. 
C)  $7,500 preferred; $22,500 common. 
D)  $15,000 preferred; $15,000 common. 
E)  $0 preferred; $30,000 common.

Question 16

Dawls Corporation reported stockholders' equity on December 31 of the prior year as follows:   The following selected transactions occurred during the current year:   Prepare a statement of retained earnings as of December 31 of the current year.

Accepted Answer

The answer of Dawls Corporation reported stockholders' equity on December...

Question 17

Shamrock Company had net income of $30,000. The weighted-average common shares outstanding were 8,000. The company declared a $2,700 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:

Accepted Answer

A)  $2.87. 
B)  $2.73. 
C)  $3.41. 
D)  $3.16. 
E)  $3.75. 
A)  $2.87. 
B)  $2.73. 
C)  $3.41. 
D)  $3.16. 
E)  $3.75.

Question 18

Recording of a stock dividend does not result in a liability being recorded.

Accepted Answer

A) True 
 B)False

Question 19

Stockholders' equity consists of:

Accepted Answer

A)  Long-term assets. 
B)  Paid-in capital and retained earnings. 
C)  Paid-in capital and par value. 
D)  Retained earnings and cash. 
E)  Premiums and discounts. 
A)  Long-term assets. 
B)  Paid-in capital and retained earnings. 
C)  Paid-in capital and par value. 
D)  Retained earnings and cash. 
E)  Premiums and discounts.

Question 20

A corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares. At the time of the stock dividend, the market value per share was $12. The entry to record this dividend is:

Accepted Answer

A)  Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $36,000. 
B)  Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $30,000; credit Paid-In Capital in Excess of Par Value, Common Stock $6,000. 
C)  Debit Common Stock Dividend Distributable $36,000; credit Retained Earnings $36,000. 
D)  Debit Retained Earnings $30,000; credit Common Stock Dividend Distributable $30,000. 
E)  No entry is needeD.3,000/10,000 shares = large stock dividend of 30%. Large stock dividends are recorded at par value (3,000 shares x $10) 
A)  Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $36,000. 
B)  Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $30,000; credit Paid-In Capital in Excess of Par Value, Common Stock $6,000. 
C)  Debit Common Stock Dividend Distributable $36,000; credit Retained Earnings $36,000. 
D)  Debit Retained Earnings $30,000; credit Common Stock Dividend Distributable $30,000. 
E)  No entry is needeD.3,000/10,000 shares = large stock dividend of 30%. Large stock dividends are recorded at par value (3,000 shares x $10)

Exam 13: Accounting for Corporations

A premium on common stock:

A company reported $990,000 in net income for the current year. Total weighted-average number of common shares outstanding are 150,000 shares, and the year-end market price is $79.20 per common share. Calculate the company's price earnings ratio.

On September 1, a corporation had 50,000 shares of $5 par value common stock, and $1,000,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

A corporation reported net income of $3,730,000 and paid preferred cash dividends of $100,000 during the current year. There were 600,000 weighted-average shares of common stock outstanding and the market price per common share was $88.33 at year-end. Calculate the company's price-earnings ratio.

Dividend payment involves three important dates. They are ____________________, _______________________, and __________________________.

The dividend yield is computed by dividing:

Shamrock Company had net income of $30,000. The weighted-average common shares outstanding were 8,000. The company sold 3,000 shares before the end of the year. There were no other stock transactions. The company's earnings per share is:

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

A company paid $0.75 in cash dividends per share. Its earnings per share is $3.50, and its market price per share is $37.50. Its dividend yield equals:

Dividend yield is computed by dividing annual cash dividends per share by the market value per share.

Preferred stock is often issued:

A company has 40,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $470,000, and the par value per common share is $10. The book value per share is:

The price-earnings ratio is calculated by dividing:

The amount of income earned per share of a company's outstanding common stock is known as:

Dawls Corporation reported stockholders' equity on December 31 of the prior year as follows: The following selected transactions occurred during the current year: Prepare a statement of retained earnings as of December 31 of the current year.

Shamrock Company had net income of $30,000. The weighted-average common shares outstanding were 8,000. The company declared a $2,700 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:

Recording of a stock dividend does not result in a liability being recorded.

Stockholders' equity consists of:

A corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares. At the time of the stock dividend, the market value per share was $12. The entry to record this dividend is:

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

Filters

Dividend payment involves three important dates. They are ________, _, and ________________.