Question 1

The main limitation in using book value per share for stock valuation models is the potential difference between recorded value and market value for both assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 2

A liability for dividends exists:

Accepted Answer

A) When cumulative preferred stock is sold. 
B) On the date of declaration. 
C) On the date of record. 
D) On the date of payment. 
E) For dividends in arrears on cumulative preferred stock.

Question 3

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000.The entry to record this exchange is:

Accepted Answer

A) Debit Land $70,000; credit Common Stock $50,000; credit Paid-In Capital in Excess of Par Value,Common Stock $20,000. 
B) Debit Land $70,000; credit Common Stock $70,000. 
C) Debit Land $50,000; credit Common Stock $50,000. 
D) Debit Common Stock $50,000; debit Paid-In Capital in Excess of Par Value,Common Stock $20,000; credit Land $70,000. 
E) Debit Common Stock $70,000; credit Land $70,000.

Question 4

Declaration of a stock dividend results in a liability being recorded.

Accepted Answer

A) True 
 B)False

Question 5

A corporation issued 100 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state.The entry to record this transaction will include:

Accepted Answer

A) A $1,800 credit to Common Stock. 
B) A $300 debit to Organization Expenses. 
C) A $1,300 credit to Paid-in Capital in Excess of Par Value,Common Stock. 
D) A $1,800 debit to Legal Expenses. 
E) A $1,800 credit to Cash.

Question 6

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the dividend declaration is:

Accepted Answer

A) Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000. 
B) Debit Common Dividends Payable $95,000; credit Cash $95,000. 
C) Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000. 
D) Debit Common Dividends Payable $90,000; credit Cash $90,000. 
E) Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000.

Question 7

Retained earnings generally consists of a company's cumulative net income less any net losses and dividends declared.

Accepted Answer

A) True 
 B)False

Question 8

When a corporation has only one class of stock,the stock is called:

Accepted Answer

A) Preferred stock. 
B) Common stock. 
C) Par value stock. 
D) Stated value stock. 
E) No-par value stock.

Question 9

The least amount that the buyers of stock must contribute to the corporation or be at risk to pay creditors at a future date is called ________.

Accepted Answer

The answer of The least amount that the buyers of...

Question 10

The Paid-in Capital,Treasury Stock account can have a zero or credit balance.

Accepted Answer

A) True 
 B)False

Question 11

The term restricted retained earnings refers to statutory but not contractual restrictions.

Accepted Answer

A) True 
 B)False

Question 12

Torino Company has 10,000 shares of $5 par value,4% cumulative and nonparticipating preferred stock and 100,000 shares of $10 par value common stock outstanding.The company paid total cash dividends of $1,000 in its first year of operation.The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

Accepted Answer

A) $1,000. 
B) $2,000. 
C) $3,000. 
D) $4,000. 
E) $0.

Question 13

A company reports the following stockholders' equity:
Paid-in Capital:
  Compute the (1)number of common shares outstanding and (2)book value per common share.

Accepted Answer

The answer of A company reports the following stockholders' equity:
Paid-in...

Question 14

Ultimate Sportswear has $100,000 of 8% noncumulative,nonparticipating,preferred stock outstanding.Ultimate Sportswear also has $500,000 of common stock outstanding.In the company's first year of operation,no dividends were paid.During the second year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Accepted Answer

A) $8,000 preferred; $22,000 common. 
B) $16,000 preferred; $14,000 common. 
C) $7,500 preferred; $22,500 common. 
D) $15,000 preferred; $15,000 common. 
E) $0 preferred; $30,000 common.

Question 15

Dividend yield shows the annual amount of cash dividends distributed to common shares relative to the stock's market price.

Accepted Answer

A) True 
 B)False

Question 16

A company made an error in recording the Year 1 purchase of computer equipment as an expense.This was discovered in Year 2.The item should be reported as a prior period adjustment on the Year 2 income statement.

Accepted Answer

A) True 
 B)False

Question 17

A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share.The entry to record this transaction would be:

Accepted Answer

A) Debit Cash $27,500; credit Paid-in Capital in Excess of Par Value,Common Stock $2,500; credit Common Stock $25,000. 
B) Debit Cash $27,500; credit Common Stock $27,500. 
C) Debit Common Stock $27,500; credit Cash $27,500. 
D) Debit Treasury Stock $27,500; credit Cash $27,500. 
E) Debit Treasury Stock $2,500; debit Paid-in Capital in Excess of Par Value,Treasury Stock $25,000; credit Common Stock $27,500.

Question 18

A company paid a cash dividend of $0.88 per share during the current year,and reported 18,000 shares of common stock issued,and 2,000 common shares in treasury stock during the current year.The year-end market price per share was $27.50.Calculate the following: (1)total amount of cash dividends paid to common shareholders,and (2)dividend yield.

Accepted Answer

The answer of A company paid a cash dividend of...

Question 19

The costs of bringing a corporation into existence,including legal fees and promoter fees,are called:

Accepted Answer

A) Minimum legal capital. 
B) Stock subscriptions. 
C) Organization expenses. 
D) Selling expenses. 
E) Prepaid fees.

Question 20

Beagle Company earned $90,000 in income and paid cash dividends of $7,000 to preferred shareholders during the current year.Beagle had 15,500 weighted-average shares of common stock outstanding for the year.Calculate the company's earnings per share.

Accepted Answer

The answer of Beagle Company earned $90,000 in income and...

Exam 11: Corporate Reporting and Analysis

The main limitation in using book value per share for stock valuation models is the potential difference between recorded value and market value for both assets and liabilities.

A liability for dividends exists:

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000.The entry to record this exchange is:

Declaration of a stock dividend results in a liability being recorded.

A corporation issued 100 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state.The entry to record this transaction will include:

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the dividend declaration is:

Retained earnings generally consists of a company's cumulative net income less any net losses and dividends declared.

When a corporation has only one class of stock,the stock is called:

The least amount that the buyers of stock must contribute to the corporation or be at risk to pay creditors at a future date is called ________.

The Paid-in Capital,Treasury Stock account can have a zero or credit balance.

The term restricted retained earnings refers to statutory but not contractual restrictions.

A company reports the following stockholders' equity: Paid-in Capital: Compute the (1)number of common shares outstanding and (2)book value per common share.

Dividend yield shows the annual amount of cash dividends distributed to common shares relative to the stock's market price.

A company made an error in recording the Year 1 purchase of computer equipment as an expense.This was discovered in Year 2.The item should be reported as a prior period adjustment on the Year 2 income statement.

A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share.The entry to record this transaction would be:

The costs of bringing a corporation into existence,including legal fees and promoter fees,are called:

Beagle Company earned $90,000 in income and paid cash dividends of $7,000 to preferred shareholders during the current year.Beagle had 15,500 weighted-average shares of common stock outstanding for the year.Calculate the company's earnings per share.