Question 1

A company issued 4,000 shares of $5 par common stock for $30 per share.The company purchased 1,200 shares as treasury stock at $32 per share.Later, the company reissued 400 shares of the treasury stock at $34 per share.Which of the following is true?

Accepted Answer

A)  The Treasury Stock account should have a balance of $25,600. 
B)  The company has a gain of $800 that should appear on the income statement. 
C)  The Treasury Stock account should have a balance of $24,800. 
D)  The company has a gain of $1,600 that should appear on the income statement.

Question 2

All changes in all stockholders' equity accounts must be shown in the Stockholders' Equity section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 3

Distribution of additional shares of stock and reduction of the par value of the stock is ______________________________.

Accepted Answer

The answer of Distribution of additional shares of stock and...

Question 4

Treasury stock is stock that has been issued, but not currently outstanding.

Accepted Answer

A) True 
 B)False

Question 5

If a company purchases treasury stock for $10,000 and then reissues it for $3,000, the difference of $7,000 is

Accepted Answer

A)  treated as a gain on the sale. 
B)  treated as a loss on the sale. 
C)  an increase in stockholders' equity. 
D)  a decrease in stockholders' equity.

Question 6

If Idaho Company has paid out more in dividends than it has had in net income, over the lifetime of the company, then the balances in the Stockholders' Equity should show:

Accepted Answer

A)  a credit balance in the common stock account. 
B)  a credit balance in the Retained Earnings account. 
C)  a debit balance in the Common Stock account. 
D)  a debit balance in the Retained Earnings account.

Question 7

The cumulative feature of stock allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Accepted Answer

A) True 
 B)False

Question 8

None of the Stockholders' Equity accounts are affected by the stock split.

Accepted Answer

A) True 
 B)False

Question 9

Match the terms to the definitions by selecting the letter of the term.Each term may be used more than once or not at all.
-The holders of this stock have the right to dividends in arrears before the current year dividend is distributed.

Accepted Answer

A) cumulative feature 
B) stock dividend 
C) retired stock 
D) retained earnings 
E) callable feature
F)convertible feature
G)outstanding shares
H)treasury stock
I)participating feature
J)additional paid-in capital

Question 10

The payment of dividends is a financing activity.

Accepted Answer

A) True 
 B)False

Question 11

Match the terms to the definitions by selecting the letter of the term.Each term may be used more than once or not at all.
-Shares of stock that are repurchased and then discontinued by removing them from the accounting records.

Accepted Answer

A) cumulative feature 
B) stock dividend 
C) retired stock 
D) retained earnings 
E) callable feature
F)convertible feature
G)outstanding shares
H)treasury stock
I)participating feature
J)additional paid-in capital

Question 12

Select the letter of the term each statement best describes.
-The amount received for the issuance of stock in excess of the par value of the stock.

Accepted Answer

A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) additional paid-in capital
F)retained earnings
G)cumulative feature
H)participating feature
I)callable stock
J)treasury stock
K)retirement of stock
L)dividend payout ratio
M)stock dividend
N)stock split
O)market value per share
P)convertible stock
Q)book value per share

Question 13

Select the letter of the term each statement best describes.
-Net income that has been earned by the corporation but not paid out as dividends.

Accepted Answer

A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) additional paid-in capital
F)retained earnings
G)cumulative feature
H)participating feature
I)callable stock
J)treasury stock
K)retirement of stock
L)dividend payout ratio
M)stock dividend
N)stock split
O)market value per share
P)convertible stock
Q)book value per share

Question 14

Which of the following should be considered when a company decides to declare a cash dividend on common stock?

Accepted Answer

A)  The retained earnings balance only 
B)  The amount of authorized shares of common stock 
C)  The book value of the company's stock 
D)  The cash available and the retained earnings balance

Question 15

Net income that has been earned by the corporation but not paid out as dividends are ______________________________.

Accepted Answer

The answer of Net income that has been earned by...

Question 16

Perry Corporation issues 20,000 shares of $0.50 par common stock for $6 per share; the Additional Paid-in Capital-Common account will increase by

Accepted Answer

A)  $110,000 
B)  $10,000 
C)  $120,000. 
D)  $130,000.

Question 17

Match the terms to the definitions by selecting the letter of the term.Each term may be used more than once or not at all.
-Allows the holders of this stock to share in the distribution of dividends above the predetermined per share amount.

Accepted Answer

A) cumulative feature 
B) stock dividend 
C) retired stock 
D) retained earnings 
E) callable feature
F)convertible feature
G)outstanding shares
H)treasury stock
I)participating feature
J)additional paid-in capital

Question 18

Stock dividends involve the issuance of additional shares of stock.

Accepted Answer

A) True 
 B)False

Question 19

The primary reason for a stock split is to

Accepted Answer

A)  distribute cash to the investor. 
B)  decrease the market value of the stock. 
C)  decrease the number of shares outstanding. 
D)  increase the contributed capital of the corporation.

Question 20

Select the letter of the term each statement best describes.
-Total stockholders' equity divided by the number of shares of common stock outstanding.

Accepted Answer

A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) additional paid-in capital
F)retained earnings
G)cumulative feature
H)participating feature
I)callable stock
J)treasury stock
K)retirement of stock
L)dividend payout ratio
M)stock dividend
N)stock split
O)market value per share
P)convertible stock
Q)book value per share

Exam 11: Stockholders Equity

A company issued 4,000 shares of $5 par common stock for $30 per share.The company purchased 1,200 shares as treasury stock at $32 per share.Later, the company reissued 400 shares of the treasury stock at $34 per share.Which of the following is true?

All changes in all stockholders' equity accounts must be shown in the Stockholders' Equity section of the balance sheet.

Distribution of additional shares of stock and reduction of the par value of the stock is ______________________________.

Treasury stock is stock that has been issued, but not currently outstanding.

If a company purchases treasury stock for $10,000 and then reissues it for $3,000, the difference of $7,000 is

If Idaho Company has paid out more in dividends than it has had in net income, over the lifetime of the company, then the balances in the Stockholders' Equity should show:

The cumulative feature of stock allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

None of the Stockholders' Equity accounts are affected by the stock split.

Match the terms to the definitions by selecting the letter of the term.Each term may be used more than once or not at all. -The holders of this stock have the right to dividends in arrears before the current year dividend is distributed.

The payment of dividends is a financing activity.

Match the terms to the definitions by selecting the letter of the term.Each term may be used more than once or not at all. -Shares of stock that are repurchased and then discontinued by removing them from the accounting records.

Select the letter of the term each statement best describes. -The amount received for the issuance of stock in excess of the par value of the stock.

Select the letter of the term each statement best describes. -Net income that has been earned by the corporation but not paid out as dividends.

Which of the following should be considered when a company decides to declare a cash dividend on common stock?

Net income that has been earned by the corporation but not paid out as dividends are ______________________________.

Perry Corporation issues 20,000 shares of $0.50 par common stock for $6 per share; the Additional Paid-in Capital-Common account will increase by

Match the terms to the definitions by selecting the letter of the term.Each term may be used more than once or not at all. -Allows the holders of this stock to share in the distribution of dividends above the predetermined per share amount.

Stock dividends involve the issuance of additional shares of stock.

The primary reason for a stock split is to

Select the letter of the term each statement best describes. -Total stockholders' equity divided by the number of shares of common stock outstanding.