Question 1

When a property dividend is declared and the market value of the property exceeds its book value,the excess is credited to

Accepted Answer

A)  Gain on Distribution of Property Dividends. 
B)  Retained Earnings. 
C)  Additional Paid-In Capital. 
D)  the related asset account. 
A)  Gain on Distribution of Property Dividends. 
B)  Retained Earnings. 
C)  Additional Paid-In Capital. 
D)  the related asset account. A

Question 2

Meower Corp.received a charter authorizing 120,000 shares of common stock at $15 par value per share.During the first year of operations,40,000 shares were sold at $28 per share.600 shares were issued in payment of a current operating debt of $18,600.In the first year,the net income was $142,000.
During the year,dividends of $46,000 were paid to stockholders.At the end of the year,total liabilities were $82,000.Use the given data to compute the following items at the end of the first year (show all computations):

Accepted Answer

(1)
   (2)
$1,316,600 - $82,000 = $1,234,600
(3)
$1,120,000 + $18,600 = $1,138,600
(4)
40,600 shares * $15 = $609,000
(5)
40,600 shares *$15 = $609,000
(6)
120,000 - 40,600 = 79,400 shares
(7)
$1,138,600 - $609,000 = $529,600

Question 3

The exercise price and market price of stock under a fixed compensatory stock option plan are equal on the grant date.The fair value of the options is greater than the option price.Under the fair value method,

Accepted Answer

A)  compensation expense will be recognized in connection with the option plan. 
B)  no compensation expense will be recognized in connection with the option plan. 
C)  deferred compensation will be recognized. 
D)  no paid-in capital from stock options will be recognized. 
A)  compensation expense will be recognized in connection with the option plan. 
B)  no compensation expense will be recognized in connection with the option plan. 
C)  deferred compensation will be recognized. 
D)  no paid-in capital from stock options will be recognized. A

Question 4

When a dividend is declared and paid in stock,

Accepted Answer

A)  total stockholders' equity does not change. 
B)  total stockholders' equity decreases. 
C)  the current ratio increases. 
D)  the amount of working capital decreases. 
A)  total stockholders' equity does not change. 
B)  total stockholders' equity decreases. 
C)  the current ratio increases. 
D)  the amount of working capital decreases.

Question 5

On January 2,2014,Sanders Corporation granted stock options to key employees for the purchase of 60,000 shares of the company's common stock at $25 per share.The options are intended to compensate employees for the next two years.The options are exercisable within a four-year period beginning January 1,2016,by grantees still in the employ of the company.The fair value of the option determined by an option pricing model is $7 at the grant date.Sanders plans to distribute up to 60,000 shares of treasury stock when options are exercised.The treasury stock was acquired by Sanders at a cost of $28 per share and was recorded under the cost method.Assume that no stock options were terminated during the year.How much should Sanders charge to Compensation Expense for the year ended December 31,2014?

Accepted Answer

A)  $420,000 
B)  $210,000 
C)  $180,000 
D)  $90,000 
A)  $420,000 
B)  $210,000 
C)  $180,000 
D)  $90,000

Question 6

How would the declaration of a 20 percent stock dividend by Astros Corporation affect each of the following on Astros' balance sheet? Retained Total Stock-
Earnings holders' Equity

Accepted Answer

A)  Decrease Decrease 
B)  Decrease No effect 
C)  No effect Decrease 
D)  No effect No effect 
A)  Decrease Decrease 
B)  Decrease No effect 
C)  No effect Decrease 
D)  No effect No effect

Question 7

Which of the following is most likely to be found in state laws regarding payment of dividends?

Accepted Answer

A)  Dividends may be paid from legal capital. 
B)  Retained earnings are available for dividends unless restricted by contract or by statute. 
C)  Unrealized capital is available for any type of dividend. 
D)  Capital from donated assets is available for dividends. 
A)  Dividends may be paid from legal capital. 
B)  Retained earnings are available for dividends unless restricted by contract or by statute. 
C)  Unrealized capital is available for any type of dividend. 
D)  Capital from donated assets is available for dividends.

Question 8

Oleander Corporation was organized on January 3,2014,with authorized capital of 100,000 shares of $10 par common stock.During 2014,Oleander had the following transactions affecting stockholders' equity:   The cost method was used to record the treasury stock transaction.Oleander's net income for 2014 is $300,000.What is the amount of stockholders' equity at December 31,2014?

Accepted Answer

A)  $640,000 
B)  $702,000 
C)  $708,000 
D)  $720,000 
A)  $640,000 
B)  $702,000 
C)  $708,000 
D)  $720,000

Question 9

Statement of Financial Accounting Standards No.160,"Noncontrolling Interests in Consolidated Financial Statements: An Amendment of ARB No.51",requires that the amount of equity interest provided by outside shareholders of subsidiaries that are not 100 %-owned by the parent company requires this amount be shown as

Accepted Answer

A)  noncontrolling interest in the liabilities section of the balance sheet. 
B)  minority interest in the "mezzanine" section of the balance sheet between liabilities and owners' equity. 
C)  noncontrolling interest in the equity section of the balance sheet. 
D)  minority interest in the equity section of the balance sheet. 
A)  noncontrolling interest in the liabilities section of the balance sheet. 
B)  minority interest in the "mezzanine" section of the balance sheet between liabilities and owners' equity. 
C)  noncontrolling interest in the equity section of the balance sheet. 
D)  minority interest in the equity section of the balance sheet.

Question 10

The following was abstracted from the accounts of the Aspen Corp.at year-end:   What should be the current balance of Retained Earnings?

Accepted Answer

A)  $260,000 
B)  $290,000 
C)  $305,000 
D)  $335,000 
A)  $260,000 
B)  $290,000 
C)  $305,000 
D)  $335,000

Question 11

The following information pertains to Hermosa Corp.for the year ended September 30,2014:
   Prepare a statement of retained earnings for Hermosa Corp.for the year ended September 30,2014.

Accepted Answer

The answer of The following information pertains to Hermosa Corp.for...

Question 12

On September 20,2014,Shunt Corporation declared the distribution of the following dividend to its stockholders of record as of September 30,2014:   The entry to record the declaration of the property dividend would include a debit to Retained Earnings of

Accepted Answer

A)  $1,575,000. 
B)  $1,450,000. 
C)  $850,000. 
D)  $600,000. 
A)  $1,575,000. 
B)  $1,450,000. 
C)  $850,000. 
D)  $600,000.

Question 13

When treasury stock is purchased for more than its par value,Treasury Stock is debited for the purchase price under which of the following methods? Cost Method Par Value Method

Accepted Answer

A)  No No 
B)  No Yes 
C)  Yes No 
D)  Yes Yes 
A)  No No 
B)  No Yes 
C)  Yes No 
D)  Yes Yes

Question 14

On December 31,2014,the stockholders' equity section of Pierce Co.was as follows:   On March 31,2015,Pierce declared a 10 percent stock dividend,and accordingly 1,800 additional shares were issued,when the fair market value of the stock was $16 per share.For the three months ended March 31,2015,Pierce sustained a net loss of $64,000.The balance of Pierce's Retained Earnings as of March 31,2015,should be

Accepted Answer

A)  $99,200. 
B)  $110,000. 
C)  $112,000. 
D)  $128,000. 
A)  $99,200. 
B)  $110,000. 
C)  $112,000. 
D)  $128,000.

Question 15

Current financial accounting standards require

Accepted Answer

A)  the use of the fair value method,but not the intrinsic value method. 
B)  the use of the fair value method and the intrinsic value method to account for each plan. 
C)  disclosure in the notes to the financial statements of compensation expense under the fair value method if the intrinsic value method is used. 
D)  disclosure in the notes to the financial statements of compensation expense under the intrinsic value method if the fair value method is used. 
A)  the use of the fair value method,but not the intrinsic value method. 
B)  the use of the fair value method and the intrinsic value method to account for each plan. 
C)  disclosure in the notes to the financial statements of compensation expense under the fair value method if the intrinsic value method is used. 
D)  disclosure in the notes to the financial statements of compensation expense under the intrinsic value method if the fair value method is used.

Question 16

A company issued rights to its existing shareholders to acquire,at $15 per share,5,000 unissued shares of common stock with a par value of $10 per share.Common Stock will be credited at

Accepted Answer

A)  $15 per share when the rights are exercised. 
B)  $15 per share when the rights are issued. 
C)  $10 per share when the rights are exercised. 
D)  $10 per share when the rights are issued. 
A)  $15 per share when the rights are exercised. 
B)  $15 per share when the rights are issued. 
C)  $10 per share when the rights are exercised. 
D)  $10 per share when the rights are issued.

Question 17

The Erhardt Corporation was incorporated on January 1,2014,with the following authorized capitalization:   During 2014,Erhardt issued 34,000 shares of common stock for a total of $1,700,000 and 6,000 shares of preferred stock at $16 per share.In addition,on December 20,2014,subscriptions for 2,000 shares of preferred stock were taken at a purchase price of $17.These subscribed shares were paid for on January 2,2015.What should Erhardt report as total contributed capital on its December 31,2014,balance sheet?

Accepted Answer

A)  $1,540,000 
B)  $1,762,000 
C)  $1,796,000 
D)  $1,830,000 
A)  $1,540,000 
B)  $1,762,000 
C)  $1,796,000 
D)  $1,830,000

Question 18

Island Company has 1,000,000 shares of common stock authorized with a par value of $3 per share of which 600,000 shares are outstanding.Island authorized a stock dividend when the market value was $8 per share,entitling its stockholders to one additional share for each share held.The par value of the stock was not changed.Assuming the declaration is not recorded separately,what entry,if any,should Island make to record distribution of the stock dividend?

Accepted Answer

A)  Retained Earnings...........4,800,000
Common Stock..............1,800,000
Gain on Stock Dividends...3,000,000 
B)  Retained Earnings...........1,800,000
Common Stock..............1,800,000 
C)  Retained Earnings...........4,800,000
Common Stock..............1,800,000
Paid-In Capital from Stock Dividends 3,000,000 
D)  Memorandum entry noting the number of additional shares issued as a dividend 
A)  Retained Earnings...........4,800,000
Common Stock..............1,800,000
Gain on Stock Dividends...3,000,000 
B)  Retained Earnings...........1,800,000
Common Stock..............1,800,000 
C)  Retained Earnings...........4,800,000
Common Stock..............1,800,000
Paid-In Capital from Stock Dividends 3,000,000 
D)  Memorandum entry noting the number of additional shares issued as a dividend

Question 19

On February 1,authorized common stock was sold on a subscription basis at a price in excess of par value,and 20 percent of the subscription price was collected.On May 1,the remaining 80 percent of the subscription price was collected.Additional Paid-In Capital would increase on February 1 May 1

Accepted Answer

A)  No Yes 
B)  No No 
C)  Yes No 
D)  Yes Yes 
A)  No Yes 
B)  No No 
C)  Yes No 
D)  Yes Yes

Question 20

Treasury stock was acquired for cash at a price in excess of its par value.The treasury stock was subsequently reissued for cash at a price in excess of its acquisition price.Assuming that the cost method of accounting for treasury stock transactions is used,what is the effect on retained earnings? Acquisition of Reissuance of
Treasury Stock Treasury Stock

Accepted Answer

A)  No effect Increase 
B)  Increase No effect 
C)  No effect No effect 
D)  Increase Decrease 
A)  No effect Increase 
B)  Increase No effect 
C)  No effect No effect 
D)  Increase Decrease

When a property dividend is declared and the market value of the property exceeds its book value,the excess is credited to

The exercise price and market price of stock under a fixed compensatory stock option plan are equal on the grant date.The fair value of the options is greater than the option price.Under the fair value method,

When a dividend is declared and paid in stock,

How would the declaration of a 20 percent stock dividend by Astros Corporation affect each of the following on Astros' balance sheet? Retained Total Stock- Earnings holders' Equity

Which of the following is most likely to be found in state laws regarding payment of dividends?

The following was abstracted from the accounts of the Aspen Corp.at year-end: What should be the current balance of Retained Earnings?

The following information pertains to Hermosa Corp.for the year ended September 30,2014: Prepare a statement of retained earnings for Hermosa Corp.for the year ended September 30,2014.

On September 20,2014,Shunt Corporation declared the distribution of the following dividend to its stockholders of record as of September 30,2014: The entry to record the declaration of the property dividend would include a debit to Retained Earnings of

When treasury stock is purchased for more than its par value,Treasury Stock is debited for the purchase price under which of the following methods? Cost Method Par Value Method

Current financial accounting standards require

A company issued rights to its existing shareholders to acquire,at $15 per share,5,000 unissued shares of common stock with a par value of $10 per share.Common Stock will be credited at

On February 1,authorized common stock was sold on a subscription basis at a price in excess of par value,and 20 percent of the subscription price was collected.On May 1,the remaining 80 percent of the subscription price was collected.Additional Paid-In Capital would increase on February 1 May 1

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 13: Equity Financing

When a property dividend is declared and the market value of the property exceeds its book value,the excess is credited to

The exercise price and market price of stock under a fixed compensatory stock option plan are equal on the grant date.The fair value of the options is greater than the option price.Under the fair value method,

When a dividend is declared and paid in stock,

How would the declaration of a 20 percent stock dividend by Astros Corporation affect each of the following on Astros' balance sheet? Retained Total Stock- Earnings holders' Equity

Which of the following is most likely to be found in state laws regarding payment of dividends?

The following was abstracted from the accounts of the Aspen Corp.at year-end: What should be the current balance of Retained Earnings?

The following information pertains to Hermosa Corp.for the year ended September 30,2014: Prepare a statement of retained earnings for Hermosa Corp.for the year ended September 30,2014.

On September 20,2014,Shunt Corporation declared the distribution of the following dividend to its stockholders of record as of September 30,2014: The entry to record the declaration of the property dividend would include a debit to Retained Earnings of

When treasury stock is purchased for more than its par value,Treasury Stock is debited for the purchase price under which of the following methods? Cost Method Par Value Method

Current financial accounting standards require

A company issued rights to its existing shareholders to acquire,at $15 per share,5,000 unissued shares of common stock with a par value of $10 per share.Common Stock will be credited at

On February 1,authorized common stock was sold on a subscription basis at a price in excess of par value,and 20 percent of the subscription price was collected.On May 1,the remaining 80 percent of the subscription price was collected.Additional Paid-In Capital would increase on February 1 May 1

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters