Question 1

A corporation must always have more than one class of stock.

Accepted Answer

A) True 
 B)False

Question 2

The following two items are disclosed in the stockholders' equity section of Riverside Corporation's December 31,2018,balance sheet:   If the company had reacquired 700 shares of treasury stock in February of 2018,then for what amount was the other treasury stock sold for during 2018?

Accepted Answer

A) $2 per share above its par value 
B) $2 per share 
C) $2 per share above its cost 
D) $22 per share above its cost 
A) $2 per share above its par value 
B) $2 per share 
C) $2 per share above its cost 
D) $22 per share above its cost

Question 3

The market price of a preferred stock will be affected by:

Accepted Answer

A) The dividend rate. 
B) The chance that the company will not operate profitably. 
C) The level of interest rates. 
D) The dividend rate,the chance that the company will not operate profitably,and the level of interest rates. 
A) The dividend rate. 
B) The chance that the company will not operate profitably. 
C) The level of interest rates. 
D) The dividend rate,the chance that the company will not operate profitably,and the level of interest rates.

Question 4

[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.
-Assuming Juniper Corporation did not issue any more common stock in 2018,how does the increase in value of its outstanding stock affect Juniper?

Accepted Answer

A) Juniper should recognize additional net income for 2018 of $4 per share,or $240,000. 
B) Paid-in capital at December 31,2018,is $720,000 (i.e. ,60,000 shares times $12 per share). 
C) This increase in market value of outstanding stock is not recorded in the financial statements of Juniper Corporation. 
D) Each shareholder must pay an additional $4 per share to Jupiter. 
A) Juniper should recognize additional net income for 2018 of $4 per share,or $240,000. 
B) Paid-in capital at December 31,2018,is $720,000 (i.e. ,60,000 shares times $12 per share). 
C) This increase in market value of outstanding stock is not recorded in the financial statements of Juniper Corporation. 
D) Each shareholder must pay an additional $4 per share to Jupiter.

Question 5

Preferred stockholders generally do not have the same voting rights in a corporation as common stockholders.

Accepted Answer

A) True 
 B)False

Question 6

[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:
  
-What was the average issue price per share of common stock?

Accepted Answer

A) $2.75 per share 
B) $1.25 per share 
C) $1.50 per share 
D) $3.75 per share 
A) $2.75 per share 
B) $1.25 per share 
C) $1.50 per share 
D) $3.75 per share

Question 7

International accounting standards require mandatory redeemable preferred stock to be classified as a liability on the balance sheet and not as equity.

Accepted Answer

A) True 
 B)False

Question 8

[The following information applies to the questions displayed below.]
Shown below is information relating to the stockholders' equity of Grant Corporation at December 31,2018:
   Dividends have been declared and paid for 2018.
-The average issue price per share of Grant's preferred stock was:

Accepted Answer

A) $112. 
B) $100. 
C) $110. 
D) $66. 
A) $112. 
B) $100. 
C) $110. 
D) $66.

Question 9

Treasury stock is stock that is issued and outstanding but not authorized.

Accepted Answer

A) True 
 B)False

Question 10

The board of directors is at the top of a corporate organization chart,followed by the stockholders,then the CEO or president of the corporation.

Accepted Answer

A) True 
 B)False

Question 11

[The following information applies to the questions displayed below.]
Vision Corporation has the following information on its financial statement:
  
-If Vision decided to purchase 50,000 shares of its common stock to be used for future stock option plans at $9.50 per share,what journal entry would they make?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

Cash dividends and two classes of stock
Raymond Inc. ,has two classes of capital stock outstanding: 25,000 shares of 5%,$100 par value cumulative preferred and 30,000 shares of $10 par value common.The company had a deficit (negative balance in retained earnings)of $160,000 at the beginning of the current year,and preferred dividends were three years in arrears.During the current year,the company earned net income of $970,000.What will be the balance in the Retained Earnings account at the end of the current year if the company takes all the actions necessary to pay a dividend of $2.50 per share on the common stock? $________

Accepted Answer

The answer of Cash dividends and two classes of stock
Raymond...

Question 13

Stock that had been issued by a corporation,and later reacquired,is classified as:

Accepted Answer

A) Treasury stock. 
B) Non-participating preferred stock. 
C) Restricted stock. 
D) Issued shares. 
A) Treasury stock. 
B) Non-participating preferred stock. 
C) Restricted stock. 
D) Issued shares.

Question 14

Financial reporting of retained earnings
The 2018 annual report of Kirtland Products disclosed net income of approximately $87 million for the fiscal year ending March 31,2018,and retained earnings of approximately $485 million as of March 31,2018.
(a)Which financial statement shows computation of net income?
(b)Which financial statement includes the retained earnings figure of $485 million?
(c)Explain why Kirtland reports $87 million as net income,but a much larger amount,$485 million,as retained earnings.

Accepted Answer

(a)Income statement (or statement of ope

Question 15

[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 was the original issue price per share of common stock?

Accepted Answer

A) $10.00 per share 
B) $2.40 per share 
C) $15.00 per share 
D) $8.00 per share 
A) $10.00 per share 
B) $2.40 per share 
C) $15.00 per share 
D) $8.00 per share

Question 16

The journal entry to record the reissuance of the 600 shares of stock on October 15 includes a:

Accepted Answer

A) Credit to Common Stock of $6,000. 
B) Credit to Additional Paid-In Capital: Treasury Stock Transactions of $3,000. 
C) Credit to Gain on Treasury Stock Transactions of $3,000. 
D) Credit to Treasury Stock Reissued of $39,000. 
A) Credit to Common Stock of $6,000. 
B) Credit to Additional Paid-In Capital: Treasury Stock Transactions of $3,000. 
C) Credit to Gain on Treasury Stock Transactions of $3,000. 
D) Credit to Treasury Stock Reissued of $39,000.

Question 17

On January 1,2018,Aili Corporation issued 60,000 shares of its total 200,000 authorized shares of $4 par value common stock for $18 per share.On December 31,2018,Aili Corporation's common stock is trading at $32 per share.Assume Aili Corporation decides to issue an additional 10,000 shares of its common stock on December 31,2018.How will the above increase in value affect Aili?

Accepted Answer

A) Aili can issue the 10,000 shares at a higher price than the initial 60,000 shares. 
B) Aili can sell the 10,000 shares for $32 each,as well as collect an additional $14 per share for each of the 60,000 shares sold initially. 
C) Aili reports a gain of $14 per share on all stock sold during the year. 
D) Paid-in capital at the end of 2018 will be $2,240,000 (i.e. ,70,000 shares times $32 per share). 
A) Aili can issue the 10,000 shares at a higher price than the initial 60,000 shares. 
B) Aili can sell the 10,000 shares for $32 each,as well as collect an additional $14 per share for each of the 60,000 shares sold initially. 
C) Aili reports a gain of $14 per share on all stock sold during the year. 
D) Paid-in capital at the end of 2018 will be $2,240,000 (i.e. ,70,000 shares times $32 per share).

Question 18

Which statement is true about a stock split?

Accepted Answer

A) Total shareholders' equity increases. 
B) Total shareholders' equity decreases. 
C) Total shareholders' equity remains the same. 
D) A change in total stockholders' equity depends upon whether it is a 2-for-1 split or a 3-for-1 split. 
A) Total shareholders' equity increases. 
B) Total shareholders' equity decreases. 
C) Total shareholders' equity remains the same. 
D) A change in total stockholders' equity depends upon whether it is a 2-for-1 split or a 3-for-1 split.

Question 19

The most important factor affecting the market price of common stock is the stated dividend rate.

Accepted Answer

A) True 
 B)False

Question 20

Coronet Corp.has total stockholders' equity of $7,400,000.The company's outstanding capital stock includes 100,000 shares of $10 par value common stock and 20,000 shares of 6%,$100 par value preferred stock.(No dividends are in arrears. )The book value per share of common stock is:

Accepted Answer

A) $39. 
B) $49. 
C) $54. 
D) $74. 
A) $39. 
B) $49. 
C) $54. 
D) $74.

Exam 11: Stockholders Equity: Paid-In Capital

A corporation must always have more than one class of stock.

The following two items are disclosed in the stockholders' equity section of Riverside Corporation's December 31,2018,balance sheet: If the company had reacquired 700 shares of treasury stock in February of 2018,then for what amount was the other treasury stock sold for during 2018?

The market price of a preferred stock will be affected by:

Preferred stockholders generally do not have the same voting rights in a corporation as common stockholders.

[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: -What was the average issue price per share of common stock?

International accounting standards require mandatory redeemable preferred stock to be classified as a liability on the balance sheet and not as equity.

[The following information applies to the questions displayed below.] Shown below is information relating to the stockholders' equity of Grant Corporation at December 31,2018: Dividends have been declared and paid for 2018. -The average issue price per share of Grant's preferred stock was:

Treasury stock is stock that is issued and outstanding but not authorized.

The board of directors is at the top of a corporate organization chart,followed by the stockholders,then the CEO or president of the corporation.

Stock that had been issued by a corporation,and later reacquired,is classified as:

[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 was the original issue price per share of common stock?

The journal entry to record the reissuance of the 600 shares of stock on October 15 includes a:

Which statement is true about a stock split?

The most important factor affecting the market price of common stock is the stated dividend rate.

Coronet Corp.has total stockholders' equity of $7,400,000.The company's outstanding capital stock includes 100,000 shares of $10 par value common stock and 20,000 shares of 6%,$100 par value preferred stock.(No dividends are in arrears. )The book value per share of common stock is:

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

Filters