Question 1

Match the terms to the definitions.
a.authorized shares
i.stock option
b.issued shares
j.stock warrant
c.outstanding shares
k.treasury stock
d.par value
l.call provision
e.stated capital (legal capital)
m.earnings per share
f.preemptive right
n.dividend yield ratio
g.retained earnings
o.dividend payout ratio
h.stock split
-The maximum number of shares the corporation may issue in each class of stock.

Accepted Answer

The answer of Match the terms to the definitions.
a.authorized shares
i.stock...

Question 2

The following information comes from a balance sheet at December 31, 2015:
  Answer the following questions:

Accepted Answer

The answer of The following information comes from a balance...

Question 3

When a corporation pays a previously declared cash dividend, which of the following is true?

Accepted Answer

A) cash increases 
B) liabilities decrease 
C) stockholders' equity decreases 
D) no entry is necessary

Question 4

Dividend-related dates follow this chronological order: declaration date, record date, and payment date.

Accepted Answer

A) True 
 B)False

Question 5

A growing corporation had $180,000 of its $30 par common stock issued before its recent 3-for-1 stock split. The market price of the stock was $120 per share before the split. Which of the following is true as a result of the split?

Accepted Answer

A) There were 24,000 shares (6,000 + 18,000)of common stock issued after the split. 
B) The balance in the common stock account increased to $540,000. 
C) The market price of the stock tripled. 
D) The par value of the stock decreased to $10 per share.

Question 6

A company plans to distribute $134,000 in dividends. It has outstanding 200,000 shares of 7% $10 par preferred stock (non-cumulative and non-participating)and 60,000 shares of $2 par common stock. How much will be distributed per share on preferred and common stock? Preferred stock Common stock

Accepted Answer

A) $0.52 $0.52 
B) $0.67 $0.00 
C) $0.00 $2.23 
D) $0.60 $2.00

Question 7

Large corporations are profitable enough to maintain their own stockholder lists and arrange for the issuance of their stock certificates to stockholders rather than having to retain an independent stock transfer agent to do those things.

Accepted Answer

A) True 
 B)False

Question 8

Match the terms to the definitions.
a.authorized shares
i.stock option
b.issued shares
j.stock warrant
c.outstanding shares
k.treasury stock
d.par value
l.call provision
e.stated capital (legal capital)
m.earnings per share
f.preemptive right
n.dividend yield ratio
g.retained earnings
o.dividend payout ratio
h.stock split
-Accumulated net income of the corporation that has not been distributed as dividends.

Accepted Answer

The answer of Match the terms to the definitions.
a.authorized shares
i.stock...

Question 9

A corporate charter is sometimes called the articles of incorporation.

Accepted Answer

A) True 
 B)False

Question 10

A corporation has 5,000 shares of $5 par, 6% cumulative preferred stock outstanding and 25,000 shares of $2 par common stock outstanding. No dividends have been paid for the past 2 years. If the company wishes to distribute $2 per share to the common stockholders this year, what is the total amount of dividends that must be paid?

Accepted Answer

A) $4,500 
B) $50,000 
C) $51,500 
D) $54,500

Question 11

If a corporation issues cumulative, participating preferred stock, which of the following is true regarding the rights of the preferred stockholders?

Accepted Answer

A) They must forego dividends for any periods when no dividends are declared. 
B) They will share in the dividends that exceed a specified amount. 
C) They will received a fixed dividend regardless of the amount of dividends declared. 
D) They will have an option to convert their shares to common stock at a specified date.

Question 12

An electric utility issued 3,000 shares of common stock, all of the same class; 2,800 shares are outstanding and 200 are held in the treasury. On August 15, 2015, the board of directors declared a cash dividend of $2.10 per share, payable on September 15, 2015, to stockholders of record on August 31, 2015.
Prepare the required journal entries for August 15, August 31, and September 15.

Accepted Answer

The answer of An electric utility issued 3,000 shares of...

Question 13

-Refer to Lakeshore Industries. What is the effect of a 10% stock dividend if the market price of the common stock is $30 per share when the stock dividend is declared?

Accepted Answer

A) A stock dividend has no impact on any of the stockholders' equity accounts. 
B) Total stockholders' equity increases $75,000. 
C) Cash increases $300,000. 
D) $225,000 of retained earnings is transferred to the capital stock accounts.

Question 14

Comprehensive income represents the increase in net assets resulting from all transactions occurring during the accounting period except transactions with owners.

Accepted Answer

A) True 
 B)False

Question 15

Both stock dividends and stock splits increase the number of a corporation's outstanding shares without altering the proportionate ownership of the corporation.

Accepted Answer

A) True 
 B)False

Question 16

When computing earnings per share, the numerator includes net income minus any dividends paid to common stockholders.

Accepted Answer

A) True 
 B)False

Question 17

A stock option is the same as a stock warrant.

Accepted Answer

A) True 
 B)False

Question 18

When a corporation makes a cash distribution despite having no retained earnings, this is called a

Accepted Answer

A) dividend in arrears. 
B) call provision. 
C) conversion privilege. 
D) liquidating dividend.

Question 19

To compute the return on common equity ratio, the numerator includes ____________________ minus preferred dividends, and the denominator is the average common stockholders' equity.

Accepted Answer

The answer of To compute the return on common equity...

Question 20

No formal journal entry is required to record a stock split.

Accepted Answer

A) True 
 B)False

Exam 10: Stockholders Equity

The following information comes from a balance sheet at December 31, 2015: Answer the following questions:

When a corporation pays a previously declared cash dividend, which of the following is true?

Dividend-related dates follow this chronological order: declaration date, record date, and payment date.

A growing corporation had $180,000 of its $30 par common stock issued before its recent 3-for-1 stock split. The market price of the stock was $120 per share before the split. Which of the following is true as a result of the split?

A company plans to distribute $134,000 in dividends. It has outstanding 200,000 shares of 7% $10 par preferred stock (non-cumulative and non-participating) and 60,000 shares of $2 par common stock. How much will be distributed per share on preferred and common stock? Preferred stock Common stock

Large corporations are profitable enough to maintain their own stockholder lists and arrange for the issuance of their stock certificates to stockholders rather than having to retain an independent stock transfer agent to do those things.

A corporate charter is sometimes called the articles of incorporation.

If a corporation issues cumulative, participating preferred stock, which of the following is true regarding the rights of the preferred stockholders?

-Refer to Lakeshore Industries. What is the effect of a 10% stock dividend if the market price of the common stock is $30 per share when the stock dividend is declared?

Comprehensive income represents the increase in net assets resulting from all transactions occurring during the accounting period except transactions with owners.

Both stock dividends and stock splits increase the number of a corporation's outstanding shares without altering the proportionate ownership of the corporation.

When computing earnings per share, the numerator includes net income minus any dividends paid to common stockholders.

A stock option is the same as a stock warrant.

When a corporation makes a cash distribution despite having no retained earnings, this is called a

To compute the return on common equity ratio, the numerator includes ____________________ minus preferred dividends, and the denominator is the average common stockholders' equity.

No formal journal entry is required to record a stock split.