Question 1

Retained earnings:

Accepted Answer

A)  Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception. 
B)  Can only be appropriated by setting aside a cash fund. 
C)  Represent an amount of cash available to pay shareholders. 
D)  Are never adjusted for anything other than net income or dividends. 
E)  All of these. 
A)  Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception. 
B)  Can only be appropriated by setting aside a cash fund. 
C)  Represent an amount of cash available to pay shareholders. 
D)  Are never adjusted for anything other than net income or dividends. 
E)  All of these.

Question 2

___________________________ are corrections of material errors in prior period financial statements.

Accepted Answer

Prior peri

Question 3

A company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The earnings per share is $4.53. The current market value of the stock is $20.00. The dividend yield is:

Accepted Answer

A)  22.7%. 
B)  12.1%. 
C)  4.2%. 
D)  3.9%. 
E)  2.8%. 
A)  22.7%. 
B)  12.1%. 
C)  4.2%. 
D)  3.9%. 
E)  2.8%.

Question 4

A company reported the following stockholders' equity on January 1 of the current year:   Prepare journal entries for the following selected transactions related to this company's stock during the current year:

Accepted Answer

The answer of A company reported the following stockholders' equity...

Question 5

_____________________ is a general term that refers to any shares issued to obtain owner financing in a corporation.

Accepted Answer

The answer of _____________________ is a general term that refers...

Question 6

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

Accepted Answer

A)  Common stock's market value. 
B)  Earnings per share. 
C)  Investors' purchase price of the stock. 
D)  Amount of retained earnings. 
E)  Amount of cash. 
A)  Common stock's market value. 
B)  Earnings per share. 
C)  Investors' purchase price of the stock. 
D)  Amount of retained earnings. 
E)  Amount of cash.

Question 7

A company declared a $0.50 per share cash dividend. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:

Accepted Answer

A)  Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000. 
B)  Debit Common Dividends Payable $4,000; credit Cash $4,000. 
C)  Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500. 
D)  Debit Common Dividends Payable $4,500; credit Cash $4,500. 
E)  Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000. 
A)  Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000. 
B)  Debit Common Dividends Payable $4,000; credit Cash $4,000. 
C)  Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500. 
D)  Debit Common Dividends Payable $4,500; credit Cash $4,500. 
E)  Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000.

Question 8

Changes in retained earnings may be reported in the:

Accepted Answer

A)  Statement of cash flows. 
B)  Balance sheet. 
C)  Statement of stockholders' equity. 
D)  Multiple-step income statement. 
E)  Single-step income statement. 
A)  Statement of cash flows. 
B)  Balance sheet. 
C)  Statement of stockholders' equity. 
D)  Multiple-step income statement. 
E)  Single-step income statement.

Question 9

A large stock dividend only occurs when a distribution of more than 50% of previously outstanding shares is issued.

Accepted Answer

A) True 
 B)False

Question 10

Retained earnings:

Accepted Answer

A)  Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception. 
B)  Can be subject to a statutory restriction by a state. 
C)  Can be subject to restrictions due to loan agreements. 
D)  Can be subject to appropriation by a corporation's directors for special activities. 
E)  All of these. 
A)  Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception. 
B)  Can be subject to a statutory restriction by a state. 
C)  Can be subject to restrictions due to loan agreements. 
D)  Can be subject to appropriation by a corporation's directors for special activities. 
E)  All of these.

Question 11

Stockholders who are not officers or managers of a corporation do not have the power to bind the corporation to contracts. This is called ____________________.

Accepted Answer

Lack of mu

Question 12

Corporations are subject to substantially fewer regulations and laws than are proprietorships and partnerships.

Accepted Answer

A) True 
 B)False

Question 13

A company's stock is selling for $67.20 per share and its earnings per share is $3.50 for the current year. Calculate the price-earnings ratio.

Accepted Answer

The answer of A company's stock is selling for $67.20...

Question 14

Stock that was reacquired and is still held by the issuing corporation is called:

Accepted Answer

A)  Capital stock. 
B)  Treasury stock. 
C)  Redeemed stock. 
D)  Preferred stock. 
E)  Callable stock. 
A)  Capital stock. 
B)  Treasury stock. 
C)  Redeemed stock. 
D)  Preferred stock. 
E)  Callable stock.

Question 15

A proxy is a document that gives a designated agent the right to vote a shareholder's stock.

Accepted Answer

A) True 
 B)False

Question 16

Companies report the cost of stock options in the:

Accepted Answer

A)  Statement of cash flows. 
B)  Balance sheet. 
C)  Statement of retained earnings. 
D)  Income statement. 
E)  No disclosure is required. 
A)  Statement of cash flows. 
B)  Balance sheet. 
C)  Statement of retained earnings. 
D)  Income statement. 
E)  No disclosure is required.

Question 17

A stock dividend transfers:

Accepted Answer

A)  Contributed capital to retained earnings. 
B)  Retained earnings to contributed capital. 
C)  Retained earnings to assets. 
D)  Contributed capital to assets. 
E)  Assets to contributed capital. 
A)  Contributed capital to retained earnings. 
B)  Retained earnings to contributed capital. 
C)  Retained earnings to assets. 
D)  Contributed capital to assets. 
E)  Assets to contributed capital.

Question 18

Stocks with a price-earnings ratio greater than 20 to 25 are likely to be underpriced.

Accepted Answer

A) True 
 B)False

Question 19

A corporation issued 6,000 shares of its $10 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

Accepted Answer

A)  A debit to Common Stock for $60,000. 
B)  A debit to Land for $60,000. 
C)  A credit to Land for $60,000. 
D)  A credit to Paid-in Capital in Excess of Par Value, Common Stock for $24,000. 
E)  A credit to Common Stock for $84,000. 
A)  A debit to Common Stock for $60,000. 
B)  A debit to Land for $60,000. 
C)  A credit to Land for $60,000. 
D)  A credit to Paid-in Capital in Excess of Par Value, Common Stock for $24,000. 
E)  A credit to Common Stock for $84,000.

Question 20

A company has earnings per share net income of $900,000; its weighted-average common shares outstanding are 180,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

Accepted Answer

A)  9.0. 
B)  17.6. 
C)  12.5. 
D)  15.2. 
E)  16.9. 
A)  9.0. 
B)  17.6. 
C)  12.5. 
D)  15.2. 
E)  16.9.

Exam 13: Accounting for Corporations

Retained earnings:

___________________________ are corrections of material errors in prior period financial statements.

A company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The earnings per share is $4.53. The current market value of the stock is $20.00. The dividend yield is:

A company reported the following stockholders' equity on January 1 of the current year: Prepare journal entries for the following selected transactions related to this company's stock during the current year:

_____________________ is a general term that refers to any shares issued to obtain owner financing in a corporation.

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

A company declared a $0.50 per share cash dividend. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:

Changes in retained earnings may be reported in the:

A large stock dividend only occurs when a distribution of more than 50% of previously outstanding shares is issued.

Retained earnings:

Stockholders who are not officers or managers of a corporation do not have the power to bind the corporation to contracts. This is called ____________________.

Corporations are subject to substantially fewer regulations and laws than are proprietorships and partnerships.

A company's stock is selling for $67.20 per share and its earnings per share is $3.50 for the current year. Calculate the price-earnings ratio.

Stock that was reacquired and is still held by the issuing corporation is called:

A proxy is a document that gives a designated agent the right to vote a shareholder's stock.

Companies report the cost of stock options in the:

A stock dividend transfers:

Stocks with a price-earnings ratio greater than 20 to 25 are likely to be underpriced.

A corporation issued 6,000 shares of its $10 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

A company has earnings per share net income of $900,000; its weighted-average common shares outstanding are 180,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

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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