Question 1

The stockholders' equity in a corporation consists of capital contributed by stockholders and retained earnings.

Accepted Answer

A) True 
 B)False

Question 2

The declaration of cash dividends will increase the book value per share of common stock.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following stock terms is least like the others?

Accepted Answer

A)  Market value 
B)  Stated value 
C)  Par value 
D)  Legal capital

Question 4

Return on equity is measured in terms of

Accepted Answer

A)  days. 
B)  times. 
C)  a percentage. 
D)  dollars.

Question 5

Paloma Corporation had 5,000 shares of $100 par value,9 percent cumulative preferred stock and 30,000 shares of $10 par value common stock outstanding during each of its first four years of operation.The following amounts of cash dividends were paid during the years indicated: 2010,$0; 2011,$80,000; 2012,$220,000; 2013,$270,000.Determine the cash dividends per share paid to the preferred and common stockholders during each of the four years.

Accepted Answer

The answer of Paloma Corporation had 5,000 shares of $100...

Question 6

Dividend yield equals

Accepted Answer

A)  market price per share divided by dividends per share. 
B)  net income divided by market price per share. 
C)  net income divided by total equity 
D)  dividends per share divided by market price per share.

Question 7

Corporate earnings are not subject to double taxation.

Accepted Answer

A) True 
 B)False

Question 8

According to generally accepted accounting principles,treasury stock usually should be recorded at

Accepted Answer

A)  market value. 
B)  par value. 
C)  cost. 
D)  net realizable value.

Question 9

A corporation has 10,000 shares of 8 percent cumulative preferred stock and 20,000 shares of common stock outstanding.Par value for each is $200.No dividends were paid last year,but this year a $400,000 dividend is paid.How much of this $400,000 goes to the holders of common stock?

Accepted Answer

A)  $80,000 
B)  $160,000 
C)  $320,000 
D)  $360,000

Question 10

A corporation records the cash payment of the dividend

Accepted Answer

A)  on the payment date. 
B)  on the record date. 
C)  on the declaration date. 
D)  when the stock sells ex-dividend.

Question 11

In computing book value per share of common stock,common stock distributable is included in the number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 12

On its December 31,2012,balance sheet,Montrose Corporation reported its stockholders' equity as follows:
  During 2013,the following transactions occurred:
Reacquired 2,500 shares at $7 per share.
Sold 1,200 shares of treasury stock at $8 per share.
Sold 500 shares of treasury stock at $6 per share.
Net income for 2010 amounted to $80,000. 
a.Prepare the entries in journal form for the three transactions involving treasury stock.(Omit explanations.)
b.Compute the amount of total contributed capital to be reported on the December 31,2013,balance sheet.

Accepted Answer

The answer of On its December 31,2012,balance sheet,Montrose Corporation reported...

Question 13

The date on a statement of stockholders' equity is for a period of time rather than for a specific point in time.

Accepted Answer

A) True 
 B)False

Question 14

Use this information to answer the following question. Hernandez Corporation has 60,000 shares of $20 par value common stock outstanding.The following transactions occurred during the year:
 The entry to record the transaction of March 30 would be:

Accepted Answer

A)  Common Stock Distributable 120,000
Common Stock 120,000 
B)  Common Stock Distributable 120,000
Retained Earnings 36,000
Common Stock 156,000 
C)  Common Stock Distributable 156,000
Common Stock 120,000
Additional Paid-in Capital 36,000 
D)  Common Stock Distributable 120,000
Cash 120,000

Question 15

Poquito Corporation had both the following transactions occur on the same day:
1. Issued 30,000 shares of its $5 par value common stock for $360,000 cash.
2. Issued 10,000 shares of its $5 par value common stock in exchange for land and a building. The building is estimated to have a market value of $90,000.
Prepare the entries in journal form to record the above transactions. Omit explanations, but show computations.

Accepted Answer

The answer of Poquito Corporation had both the following transactions...

Question 16

Retained earnings represent the stockholders' claims to assets resulting from profitable operations.

Accepted Answer

A) True 
 B)False

Question 17

Treasury stock usually is recorded at cost when purchased.

Accepted Answer

A) True 
 B)False

Question 18

The board of directors of Autauga Corporation declared a cash dividend on July 15,2013,to be paid on August 15,2013,to shareholders holding the stock on August 1,2013.Given these facts,the date August 1,2013,is referred to as the

Accepted Answer

A)  date of declaration. 
B)  date of payment. 
C)  ex-dividend date. 
D)  date of record.

Question 19

Henry Corporation has 3,000 shares of $50 par value,7 percent cumulative preferred stock,and 10,000 shares of $5 par value common stock outstanding during its first five years of operation.Henry Corporation paid cash dividends as follows: 2009,$4,500; 2010,$0; 2011,$32,500; 2012,$15,000; 2013,$7,500.The amount of dividends in arrears at the end of 2010 was

Accepted Answer

A)  $0. 
B)  $6,000. 
C)  $9,500. 
D)  $16,500.

Question 20

At the beginning of 2013,Helms Corporation had 34,000 shares of $10 par value common stock issued and outstanding.During January 2013,Helms declared and distributed a 10 percent stock dividend.The market value of Helms's stock was $24 throughout the month of January.The entry to be recorded for the declaration of stock dividend is:

Accepted Answer

A)  Stock Dividends 81,600
Common Stock Distributable 34,000
Additional Paid-in Capital 47,600 
B)  Common Stock Distributable 81,600
Common Stock 81,600 
C)  Common Stock Distributable 81,600
Common Stock 34,000
Retained Earnings 47,600 
D)  Stock Dividends 68,000
Cash 68,000

Exam 12: Stockholders Equity

The stockholders' equity in a corporation consists of capital contributed by stockholders and retained earnings.

The declaration of cash dividends will increase the book value per share of common stock.

Which of the following stock terms is least like the others?

Return on equity is measured in terms of

Dividend yield equals

Corporate earnings are not subject to double taxation.

According to generally accepted accounting principles,treasury stock usually should be recorded at

A corporation has 10,000 shares of 8 percent cumulative preferred stock and 20,000 shares of common stock outstanding.Par value for each is $200.No dividends were paid last year,but this year a $400,000 dividend is paid.How much of this $400,000 goes to the holders of common stock?

A corporation records the cash payment of the dividend

In computing book value per share of common stock,common stock distributable is included in the number of shares outstanding.

The date on a statement of stockholders' equity is for a period of time rather than for a specific point in time.

Use this information to answer the following question. Hernandez Corporation has 60,000 shares of $20 par value common stock outstanding.The following transactions occurred during the year: The entry to record the transaction of March 30 would be:

Retained earnings represent the stockholders' claims to assets resulting from profitable operations.

Treasury stock usually is recorded at cost when purchased.

The board of directors of Autauga Corporation declared a cash dividend on July 15,2013,to be paid on August 15,2013,to shareholders holding the stock on August 1,2013.Given these facts,the date August 1,2013,is referred to as the