Question 1

Which of the following best describes the relationship between revenue and retained earnings?

Accepted Answer

A) Revenue increases net income,which in turn increases retained earnings. 
B) Revenue represents a cash receipt;retained earnings is an element of stockholders' equity. 
C) Revenue represents the price of goods sold or services rendered;retained earnings represents cash available for paying dividends. 
D) Retained earnings is equal to assets minus expenses. 
A) Revenue increases net income,which in turn increases retained earnings. 
B) Revenue represents a cash receipt;retained earnings is an element of stockholders' equity. 
C) Revenue represents the price of goods sold or services rendered;retained earnings represents cash available for paying dividends. 
D) Retained earnings is equal to assets minus expenses.

Question 2

Which of the following is not an addition to total paid-in-capital?

Accepted Answer

A) Preferred stock 
B) Common stock 
C) Preferred stock and treasury stock 
D) Retained earnings and treasury stock 
A) Preferred stock 
B) Common stock 
C) Preferred stock and treasury stock 
D) Retained earnings and treasury stock

Question 3

The par value of a stock is the minimum amount of capital of the corporation existing for the protection of creditors.

Accepted Answer

A) True 
 B)False

Question 4

The purchase of treasury stock creates an asset for the corporation and is recorded at the cost of the shares purchased.

Accepted Answer

A) True 
 B)False

Question 5

On September 1,2018,Miami Corporation's common stock was selling at a market price of $300 per share.On that date,Miami announced a 2-for-1 stock split.At what price would you expect the stock to trade immediately after the split goes into effect?

Accepted Answer

A) $100 
B) $150 
C) $200 
D) $600 
A) $100 
B) $150 
C) $200 
D) $600

Question 6

Mayfair Corporation has outstanding 70,000 shares of $1 par value common stock as well as 20,000 shares of 7%,$100 par value cumulative preferred stock.At the beginning of the year,the balance in retained earnings was $800,000,and one year's dividends were in arrears.Net income for the current year is $580,000.Compute the balance in retained earnings at the end of the year if Mayfair Corporation pays a dividend of $3 per share on its common stock this year.

Accepted Answer

A) $1,080,000 
B) $1,670,000 
C) $890,000 
D) $310,000 
A) $1,080,000 
B) $1,670,000 
C) $890,000 
D) $310,000

Question 7

When par value capital stock is issued,capital stock is credited with the par value of the shares issued,regardless of whether the issuance price is equal to par,more than par,or less than par.

Accepted Answer

A) True 
 B)False

Question 8

[The following information applies to the questions displayed below.]
On January 1,2018,Juniper Corporation issued 60,000 shares of its total 200,000 authorized shares of $4 par value common stock for $8 per share.On December 31,2018,Juniper Corporation's common stock is trading at $12 per share.
-Assume Juniper Corporation decides to issue an additional 1,000 shares of its common stock on December 31,2018.How will the above increase in value affect Jupiter?

Accepted Answer

A) Juniper can issue the 1,000 shares at a higher price than the initial 60,000 shares. 
B) Juniper can sell the 1,000 shares for $12 each,as well as collect an additional $4 per share for each of the 60,000 shares sold initially. 
C) Juniper reports a gain of $4 per share on all stock sold during the year. 
D) Paid-in capital at the end of 2018 will be $732,000 (i.e. ,61,000 shares times $12 per share). 
A) Juniper can issue the 1,000 shares at a higher price than the initial 60,000 shares. 
B) Juniper can sell the 1,000 shares for $12 each,as well as collect an additional $4 per share for each of the 60,000 shares sold initially. 
C) Juniper reports a gain of $4 per share on all stock sold during the year. 
D) Paid-in capital at the end of 2018 will be $732,000 (i.e. ,61,000 shares times $12 per share).

Question 9

Santa Fe Boat Yard has total stockholders' equity of $4,100,000,comprised of the following: - $2,000,000 in $5 preferred stock consisting of 20,000 shares of $100 par value.
- $420,000 in common stock of $6 par value per share.
- $700,000 of additional paid-in capital.
- $980,000 in retained earnings.
Assuming there are no dividends in arrears,the book value per share of common stock is:

Accepted Answer

A) $30.00. 
B) $58.57. 
C) $45.71. 
D) $6.00. 
A) $30.00. 
B) $58.57. 
C) $45.71. 
D) $6.00.

Question 10

If Brookdale Corporation had reacquired 7,000 shares of treasury stock early in 2018,and this was the company's only treasury stock transaction,then some treasury stock must have been sold during 2018 for:

Accepted Answer

A) $32 per share. 
B) $38 per share. 
C) $27 per share. 
D) $6 per share. 
A) $32 per share. 
B) $38 per share. 
C) $27 per share. 
D) $6 per share.

Question 11

The costs to organize a corporation (organization costs)are reported as an intangible asset in the balance sheet and amortized to expense over the 5-year life used by the IRS.

Accepted Answer

A) True 
 B)False

Question 12

Assuming there are no further transactions involving treasury stock in 2018,the financial statements of Jetter Corporation for 2018 will show:

Accepted Answer

A) Treasury Stock of $81,000 among the assets in the balance sheet. 
B) Gain on Sale of Treasury Stock of $3,000 in the income statement for 2018. 
C) Treasury Stock of $120,000 as a deduction in the stockholders' equity section of the December 31,2018,balance sheet. 
D) Additional Paid-In Capital: Treasury Stock Transactions of $3,000 in the December 31,2018 balance sheet. 
A) Treasury Stock of $81,000 among the assets in the balance sheet. 
B) Gain on Sale of Treasury Stock of $3,000 in the income statement for 2018. 
C) Treasury Stock of $120,000 as a deduction in the stockholders' equity section of the December 31,2018,balance sheet. 
D) Additional Paid-In Capital: Treasury Stock Transactions of $3,000 in the December 31,2018 balance sheet.

Question 13

Which of the following is not a characteristic of the corporate form of organization?

Accepted Answer

A) The owners of a corporation cannot lose more than the amount of their investment. 
B) Shares of stock in a corporation are more readily transferable than is an interest in a partnership. 
C) Stockholders have authority to decide by majority vote the amount of dividends to be paid. 
D) The corporation is a very efficient vehicle for obtaining large amounts of capital required for large-scale production. 
A) The owners of a corporation cannot lose more than the amount of their investment. 
B) Shares of stock in a corporation are more readily transferable than is an interest in a partnership. 
C) Stockholders have authority to decide by majority vote the amount of dividends to be paid. 
D) The corporation is a very efficient vehicle for obtaining large amounts of capital required for large-scale production.

Question 14

[The following information applies to the questions displayed below.]
Shown below is information relating to the stockholders' equity of Reeve Corporation as of December 31,2018:
  
-What is total paid-in capital?

Accepted Answer

A) $2,292,000 
B) $1,800,000 
C) $2,400,000 
D) $2,340,000 
A) $2,292,000 
B) $1,800,000 
C) $2,400,000 
D) $2,340,000

Question 15

[The following information applies to the questions displayed below.]
Shown below is information relating to the stockholders' equity of Brookdale Corporation at December 31,2018:
  
-The average issue price per share of the preferred stock was:

Accepted Answer

A) $150. 
B) $165. 
C) $180. 
D) $195. 
A) $150. 
B) $165. 
C) $180. 
D) $195.

Question 16

Treasury stock represents:

Accepted Answer

A) Shares of ownership in the United States Treasury Department. 
B) A current asset. 
C) Authorized shares that have never been issued. 
D) Previously outstanding shares that have been repurchased by the issuing company. 
A) Shares of ownership in the United States Treasury Department. 
B) A current asset. 
C) Authorized shares that have never been issued. 
D) Previously outstanding shares that have been repurchased by the issuing company.

Question 17

The ownership of common stock in a corporation usually carries all of the following rights except:

Accepted Answer

A) To vote for directors. 
B) To participate in dividends. 
C) To share in a distribution of assets if the corporation is to be liquidated. 
D) To set corporate policies. 
A) To vote for directors. 
B) To participate in dividends. 
C) To share in a distribution of assets if the corporation is to be liquidated. 
D) To set corporate policies.

Question 18

What's so "preferred" about preferred stocks?
Most preferred stocks do not have voting power,a basic right of common stock.Identify at least two features of most preferred stocks that justify or support use of the term preferred in describing these types of stock issues.

Accepted Answer

Student's answer should include two of t

Question 19

In a corporation's organization chart,who has/have the highest position?

Accepted Answer

A) Stockholders. 
B) Board of directors. 
C) CEO. 
D) President. 
A) Stockholders. 
B) Board of directors. 
C) CEO. 
D) President.

Question 20

Stock splits
Bainbridge Corporation recently patented an extraordinary invention that will allow average homeowners to cheaply generate a large fraction of the electricity consumed in their houses.As a result,the market price of Bainbridge's common stock has soared to $160 per share.Bainbridge is about to announce a 4-for-1 stock split.Explain why the company would take this action?

Accepted Answer

The purpose of a stock split is to bring

Exam 11: Stockholders Equity: Paid-In Capital

Which of the following best describes the relationship between revenue and retained earnings?

Which of the following is not an addition to total paid-in-capital?

The par value of a stock is the minimum amount of capital of the corporation existing for the protection of creditors.

The purchase of treasury stock creates an asset for the corporation and is recorded at the cost of the shares purchased.

On September 1,2018,Miami Corporation's common stock was selling at a market price of $300 per share.On that date,Miami announced a 2-for-1 stock split.At what price would you expect the stock to trade immediately after the split goes into effect?

When par value capital stock is issued,capital stock is credited with the par value of the shares issued,regardless of whether the issuance price is equal to par,more than par,or less than par.

If Brookdale Corporation had reacquired 7,000 shares of treasury stock early in 2018,and this was the company's only treasury stock transaction,then some treasury stock must have been sold during 2018 for:

The costs to organize a corporation (organization costs)are reported as an intangible asset in the balance sheet and amortized to expense over the 5-year life used by the IRS.

Assuming there are no further transactions involving treasury stock in 2018,the financial statements of Jetter Corporation for 2018 will show:

Which of the following is not a characteristic of the corporate form of organization?

[The following information applies to the questions displayed below.] Shown below is information relating to the stockholders' equity of Reeve Corporation as of December 31,2018: -What is total paid-in capital?

[The following information applies to the questions displayed below.] Shown below is information relating to the stockholders' equity of Brookdale Corporation at December 31,2018: -The average issue price per share of the preferred stock was:

Treasury stock represents:

The ownership of common stock in a corporation usually carries all of the following rights except:

What's so "preferred" about preferred stocks? Most preferred stocks do not have voting power,a basic right of common stock.Identify at least two features of most preferred stocks that justify or support use of the term preferred in describing these types of stock issues.

In a corporation's organization chart,who has/have the highest position?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

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