Question 1

A company issued 60 $100 par value ordinary shares for $7,000 cash. The total amount of share premium is:

Accepted Answer

A)  $100. 
B)  $600. 
C)  $1,000. 
D)  $6,000. 
E)  $7,000. 
A)  $100. 
B)  $600. 
C)  $1,000. 
D)  $6,000. 
E)  $7,000.

Question 2

The amount of income earned per share of a company's outstanding ordinary shares 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 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 treasury shares. The earnings per share is $4.53. The current market value of the shares 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

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 5

A corporation began business this year. The company is authorized to issue 50,000 $100 par, 10%, noncumulative, nonparticipating preference shares, and 500,000 no-par ordinary shares. The following selected transactions occurred during this year:
   Prepare journal entries to record these transactions.

Accepted Answer

The answer of A corporation began business this year. The...

Question 6

Stated value of no-par share is:

Accepted Answer

A)  Another name for redemption value. 
B)  An amount assigned to par value share by the state of incorporation. 
C)  The market value of the share on the date of issuance. 
D)  The difference between the par value of share and the amount below or above par value paid-in by the shareholder. 
E)  An amount assigned to no-par share by the corporation's board of directors. 
A)  Another name for redemption value. 
B)  An amount assigned to par value share by the state of incorporation. 
C)  The market value of the share on the date of issuance. 
D)  The difference between the par value of share and the amount below or above par value paid-in by the shareholder. 
E)  An amount assigned to no-par share by the corporation's board of directors.

Question 7

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

Accepted Answer

A) True 
 B)False

Question 8

A company was organized in January 2010 and has 2,000 $100 par value, 10%, nonparticipating preference shares outstanding and 30,000 $10 par value ordinary shares outstanding. It has declared and paid cash dividends each year as shown below. Calculate the total dividends distributed to each class of shareholder under each of the assumptions given.

Accepted Answer

@#IMG-DLM& Preference dividend

Question 9

A preference share which confers no right to prior periods' unpaid dividends if they were not declared is called:

Accepted Answer

A)  Noncumulative preference share. 
B)  Participating preference share. 
C)  Callable preference share. 
D)  Cumulative preference share. 
E)  Convertible preference share. 
A)  Noncumulative preference share. 
B)  Participating preference share. 
C)  Callable preference share. 
D)  Cumulative preference share. 
E)  Convertible preference share.

Question 10

The price-earnings ratio reveals information about the stock market's expectations for a company's future growth in earnings.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

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

Question 12

The annual amount of cash dividends distributed to ordinary shareholders relative to the ordinary share's market value is the:

Accepted Answer

A)  Dividend payout ratio. 
B)  Dividend yield. 
C)  Price-earnings ratio. 
D)  Current yield. 
E)  Earnings per share. 
A)  Dividend payout ratio. 
B)  Dividend yield. 
C)  Price-earnings ratio. 
D)  Current yield. 
E)  Earnings per share.

Question 13

A corporation sold 14,000 $10 par value ordinary shares at a cash price of $13 per share. The entry to record this transaction would include:

Accepted Answer

A)  A debit to Share Premium-Ordinary for $42,000. 
B)  A debit to Cash for $140,000. 
C)  A credit to Share Capital-Ordinary for $182,000. 
D)  A credit to Share Capital-Ordinary for $140,000. 
E)  A credit to Share Premium-Ordinary for $182,000. 
A)  A debit to Share Premium-Ordinary for $42,000. 
B)  A debit to Cash for $140,000. 
C)  A credit to Share Capital-Ordinary for $182,000. 
D)  A credit to Share Capital-Ordinary for $140,000. 
E)  A credit to Share Premium-Ordinary for $182,000.

Question 14

A company has 1,000 $100 par preference shares. It also has 25,000 ordinary shares outstanding, and its total shareholders' equity equals $500,000. The book value per ordinary share is:

Accepted Answer

A)  $15.38. 
B)  $16.00. 
C)  $19.96. 
D)  $20.00. 
E)  $100.00. 
A)  $15.38. 
B)  $16.00. 
C)  $19.96. 
D)  $20.00. 
E)  $100.00.

Question 15

A cumulative preference share carries the right to be paid both current and all prior periods' unpaid dividends before any dividends are paid to ordinary shareholders.

Accepted Answer

A) True 
 B)False

Question 16

On August 1, a corporation issued 15,000 no-par ordinary shares in exchange for a tract of land having a market value of $215,000. The ordinary shares have a stated value of $10 per share. Prepare the general journal entry to record this transaction.

Accepted Answer

The answer of On August 1, a corporation issued 15,000...

Question 17

Owning shares is attractive to investors because shareholders are not liable for the corporation's actions and debts and because shares are easily transferred.

Accepted Answer

A) True 
 B)False

Question 18

Corporations often buy back their own shares:

Accepted Answer

A)  To avoid a hostile take-over. 
B)  To have shares available for a merger or acquisition. 
C)  To have shares available for employee compensation. 
D)  To maintain market value for the company's shares. 
E)  All of these. 
A)  To avoid a hostile take-over. 
B)  To have shares available for a merger or acquisition. 
C)  To have shares available for employee compensation. 
D)  To maintain market value for the company's shares. 
E)  All of these.

Question 19

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

Accepted Answer

$79.20/ ($

Question 20

What are the journal entries recorded for cash dividends on the declaration date, the date of record, and the payment date?

Accepted Answer

When a corporate board of directors decl

Exam 13: Accounting for Corporations

A company issued 60 $100 par value ordinary shares for $7,000 cash. The total amount of share premium is:

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

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

The dividend yield is computed by dividing:

Stated value of no-par share is:

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

A preference share which confers no right to prior periods' unpaid dividends if they were not declared is called:

The price-earnings ratio reveals information about the stock market's expectations for a company's future growth in earnings.

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

The annual amount of cash dividends distributed to ordinary shareholders relative to the ordinary share's market value is the:

A corporation sold 14,000 $10 par value ordinary shares at a cash price of $13 per share. The entry to record this transaction would include:

A company has 1,000 $100 par preference shares. It also has 25,000 ordinary shares outstanding, and its total shareholders' equity equals $500,000. The book value per ordinary share is:

A cumulative preference share carries the right to be paid both current and all prior periods' unpaid dividends before any dividends are paid to ordinary shareholders.

On August 1, a corporation issued 15,000 no-par ordinary shares in exchange for a tract of land having a market value of $215,000. The ordinary shares have a stated value of $10 per share. Prepare the general journal entry to record this transaction.

Owning shares is attractive to investors because shareholders are not liable for the corporation's actions and debts and because shares are easily transferred.

Corporations often buy back their own shares:

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

What are the journal entries recorded for cash dividends on the declaration date, the date of record, and the payment date?

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

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments and International Operations

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

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