Exam 13: Accounting for Corporations

Receiving dividends is the only way in which stockholders can earn a return on their investment in a corporation.

If only common stock is outstanding,total stockholders' equity divided by the number of shares of common stock outstanding is called the

Which of the following has an effect on total stockholders' equity?

Indicate on the blanks below the effect (I = increase,D = decrease,NE = no effect)of a stock split on each of the items listed. _____ 1.Assets _____ 2.Balance of Common Stock account _____ 3.Total contributed capital _____ 4.Total retained earnings _____ 5.Total stockholders' equity _____ 6.Par value per share _____ 7.Total number of shares outstanding

When stock is issued for noncash assets or services,the dollar amount to be recorded for this exchange is determined by the

Why might someone prefer to invest in a company by purchasing preferred stock rather than common stock?

On the balance sheet,treasury stock owned by the company is classified properly as

a.Yorkshire Corporation has 9,000 shares of $10 par value common stock and 5,000 shares of $50 par value,10 percent cumulative preferred stock outstanding.All shares were issued at par value.In addition,retained earnings total $90,000.If the preferred stock is callable at $54 per share,and one year's dividends are in arrears,compute book value per share of preferred stock. b.Assume the same facts as in a above.Calculate book value per share of common stock. c.Assume the same facts as in a above and that Yorkshire Corporation declares a 5-for-1 stock split on its common stock.After the split,total par value of common stock equals what amount? d.Assume the same facts as in a above and that Yorkshire Corporation declares a 12 percent stock dividend on its preferred stock.If the market value on the declaration date was $70 per share,for what amount will Preferred Stock Distributable be credited?

A small stock dividend normally results in a transfer from Retained Earnings to Contributed Capital of an amount equal to the market value of the stock.

The entry required to record start-up and organization costs will cause a increase in assets.

If a corporation issues par value common stock and the proceeds are less than par value,the Common Stock account is credited for the par value.

One aspect of the corporate form can be considered both an advantage and a disadvantage.What aspect is this,and why can it be considered both?

Start-up and organization costs for a corporation that is to operate a retail store would include the costs of

A large stock dividend should be recorded on the basis of

Corporate earnings are subject to double taxation.

Dividend yield is the most important ratio associated with stockholders' equity and is a common measure of management's performance.

Which of the following transactions affects total retained earnings?

Once an owner of convertible preferred stock has converted to common,he or she cannot convert back to preferred.

The following information relates to the number of common shares of the Jackson Corporation: 60,000 Authorized shares 25,000 Unissued shares 3,500 Treasury shares Calculate the number of outstanding shares from the information given.Show your calculations.

The word preferred in the phrase preferred stock means that an owner of preferred stock has some advantages over a bondholder.