Exam 13: Accounting for Corporations

Which of the following would not affect the balance of the Retained Earnings account?

The declaration of cash dividends will increase the book value per share of common stock.

The par value of stock is an arbitrary amount assigned to each share of stock.

A corporation records a dividend-related liability

A liquidating dividend is usually paid when a company is going out of business or reducing its operations.

The declaration of a cash dividend causes an increase in a corporation's liabilities at the date of declaration.

Adobe Corporation had net income of $120,000 in 20x4 and $164,000 in 20x5.Total stockholders' equity at the end of 20x4 was $760,000 and total stockholders' equity at the end of 20x5 was $820,000.Adobe's total assets at the end of 20x4 were $1,320,000 and its total assets at the end of 20x5 were $1,410,000.Based on this information,what is Adobe's return on equity for 20x5?

Saguaro Corporation has total contributed capital of $840,000 and retained earnings of $427,000.It has 1,000 shares of $100 par value preferred stock with no dividends in arrears and 5,000 shares of $100 par value common stock.The preferred stock is callable at 105.The book value of each share of common stock is

Draw two distinctions between accounting for a stock split and accounting for a stock dividend.

The following information relates to the number of common shares of the Swan Corporation: 140,000 Authorized shares 60,000 Unissued shares 8,000 Treasury shares Calculate the number of outstanding shares from the information given.Show your calculations.

Limited liability can be viewed as both an advantage and a disadvantage.

The book value of one share of callable preferred stock is equal to the call value of the preferred share minus any dividends in arrears.

Corporations are subject to more government control and regulation than are other forms of business.

If a corporation has issued common stock at various prices that exceed par value,legal capital will be made up of the

Describe at least three reasons why a corporation would want to buy back its own stock.

If Grant Corporation has 120,000 shares of common stock authorized,75,000 shares of common stock issued,and holds 3,000 shares of common stock as treasury stock,the total number of outstanding shares of Grant Corporation amounts to

When common stock with a par value is sold for a price that exceeds par value,the Common Stock account is credited for the cash proceeds received from the sale of the shares.

When stock is issued for noncash assets or services,how does one place a valuation (dollar amount)on the transaction?

Book value per share refers to the

How is it possible for a corporation to have more shares issued than it has outstanding?