Question 1

A company's stock that it reacquires is termed treasury stock.

Accepted Answer

A) True 
 B)False

Question 2

Lionworks,Inc.issues 2,000 shares of $40 par common stock for $43 per share.The amount credited to paid-in capital in excess of par is:

Accepted Answer

A) $80,000. 
B) $86,000. 
C) $6,000. 
D) $0.

Question 3

Vintage Boutique's outstanding stock is 100 shares of $100 par,11% cumulative preferred stock and 2,000 shares of $12 par common stock.Vintage Boutique paid $1,600 in cash dividends during the year.No dividends are in arrears.Common stockholders received:

Accepted Answer

A) $0. 
B) $500. 
C) $2,500. 
D) $1,100.

Question 4

If a corporation has both common and preferred stock,the preferred stockholders will receive their dividends first,if the money is available.

Accepted Answer

A) True 
 B)False

Question 5

Preferred stock may have its dividend rate listed as a percentage of par value per share or as a flat stated amount.

Accepted Answer

A) True 
 B)False

Question 6

For the current year,Company A had sales of $300,000,net income of $200,000 and average common Stockholders' Equity of $900,000.During the same year,Company B had sales of $200,000,net income of $100,000 and average common Stockholders' Equity of $400,000.Which of the following statements is TRUE regarding this situation?

Accepted Answer

A) Company A has a better return on equity,$200,000 compared to Company B's $100,000. 
B) Company B has a better return on equity,25% compared to Company A's 22.22%. 
C) Company A has a better return on equity,$300,000 compared to Company B's $200,000 
D) Company B has a better return on equity,50% compared to Company A's 66.66%.

Question 7

Stock that is held by stockholders is called:

Accepted Answer

A) issued stock. 
B) authorized stock. 
C) outstanding stock. 
D) open stock.

Question 8

A company issued 500 shares of $3 par common stock in exchange for a piece of equipment with a current market value of $20,000.Which of the following is the correct journal entry for this transaction?

Accepted Answer

A) 
 
B) 
 
C) 
 
D)

Question 9

What is the return on equity if sales are $279,800,net income is $48,600 and average common Stockholders' Equity is $185,400?

Accepted Answer

A) 14.8% 
B) 66.3% 
C) 26.2% 
D) 17.4%

Question 10

A 2-for-1 stock split will:

Accepted Answer

A) double the number of shares of stock and double the par value per share. 
B) double the number of shares of stock and halve the par value per share. 
C) halve the number of shares of stock and halve the par value per share. 
D) halve the number of shares of stock and double the par value per share.

Question 11

When a company purchases treasury stock,outstanding stock is computed as:

Accepted Answer

A) Issued stock + Treasury stock 
B) Issued stock - Treasury stock 
C) Authorized stock - Treasury stock 
D) Authorized stock + Treasury stock

Question 12

A stock dividend has what effect on the following accounts?

Accepted Answer

A) Debit Retained Earnings,debit Common Stock;credit Paid-in Capital in Excess of Par. 
B) Debit Common Stock;credit Retained Earnings;credit Paid-in Capital in Excess of Par. 
C) Debit Retained Earnings;credit Common Stock,credit Paid-in Capital in Excess of Par. 
D) Credit Retained Earnings,credit Common Stock and credit Paid-in Capital in Excess of Par.

Question 13

Which of the following business types dominates by the amount of business transacted?

Accepted Answer

A) Partnerships 
B) Proprietorships 
C) Corporations 
D) Government entities

Question 14

Stonework Company's outstanding stock is 100 shares of $100,6% cumulative preferred stock and 2,000 shares of $10 par common stock.Stonework paid $2,000 in cash dividends including one-year dividends in arrears to preferred stockholders.Common stockholders received:

Accepted Answer

A) $1,818. 
B) $800. 
C) $600. 
D) $0.

Question 15

In addition to the regular financial statements,a company may issue a separate Statement of Stockholders' Equity.

Accepted Answer

A) True 
 B)False

Question 16

The numerator for the return on equity formula is net income.

Accepted Answer

A) True 
 B)False

Question 17

Evergreen Building,Inc.issued 2,000 shares of $18 par common stock in exchange for a truck with a current market value of $40,000.Which of the following is NOT part of the journal entry for this transaction?

Accepted Answer

A) Debiting equipment for $40,000 
B) Crediting Common Stock for $40,000 
C) Crediting Common Stock for $36,000 
D) Crediting paid-in capital in excess of par-common for $4,000

Question 18

Cumulative common stock will pay dividends in arrears.

Accepted Answer

A) True 
 B)False

Question 19

Before a 2-for-1 stock split,the shares outstanding were 40,000 shares at $50 par.After the split,what was the par value and number of shares?

Accepted Answer

A) 80,000 shares and $25/share 
B) 20,000 shares and $100/share 
C) 20,000 shares and $25/share 
D) 80,000 shares and $100/share

Question 20

The entry to record selling 500 shares of stated value $40 common stock for $52 per share would be:

Accepted Answer

A) debit Cash $26,000;credit Common Stock $20,000;credit Paid-in Capital in Excess of Stated Value-$6,000. 
B) debit Cash $20,000;credit Common Stock $20,000. 
C) debit Cash $20,000;debit Paid-in Capital in Excess of Stated Value-$6,000;credit Common Stock $26,000. 
D) debit Cash $26,000;credit Common Stock $26,000.

Exam 10: Corporations: Paid-In Capital and Retained Earnings

A company's stock that it reacquires is termed treasury stock.

Lionworks,Inc.issues 2,000 shares of $40 par common stock for $43 per share.The amount credited to paid-in capital in excess of par is:

Vintage Boutique's outstanding stock is 100 shares of $100 par,11% cumulative preferred stock and 2,000 shares of $12 par common stock.Vintage Boutique paid $1,600 in cash dividends during the year.No dividends are in arrears.Common stockholders received:

If a corporation has both common and preferred stock,the preferred stockholders will receive their dividends first,if the money is available.

Preferred stock may have its dividend rate listed as a percentage of par value per share or as a flat stated amount.

Stock that is held by stockholders is called:

A company issued 500 shares of $3 par common stock in exchange for a piece of equipment with a current market value of $20,000.Which of the following is the correct journal entry for this transaction?

What is the return on equity if sales are $279,800,net income is $48,600 and average common Stockholders' Equity is $185,400?

A 2-for-1 stock split will:

When a company purchases treasury stock,outstanding stock is computed as:

A stock dividend has what effect on the following accounts?

Which of the following business types dominates by the amount of business transacted?

Stonework Company's outstanding stock is 100 shares of $100,6% cumulative preferred stock and 2,000 shares of $10 par common stock.Stonework paid $2,000 in cash dividends including one-year dividends in arrears to preferred stockholders.Common stockholders received:

In addition to the regular financial statements,a company may issue a separate Statement of Stockholders' Equity.

The numerator for the return on equity formula is net income.

Evergreen Building,Inc.issued 2,000 shares of $18 par common stock in exchange for a truck with a current market value of $40,000.Which of the following is NOT part of the journal entry for this transaction?

Cumulative common stock will pay dividends in arrears.

Before a 2-for-1 stock split,the shares outstanding were 40,000 shares at $50 par.After the split,what was the par value and number of shares?

The entry to record selling 500 shares of stated value $40 common stock for $52 per share would be: