Question 1

What is the usual effect of a stock split (effected in the form of a stock dividend)on each of the following?

Accepted Answer

The answer of What is the usual effect of a...

Question 2

Mandatorily redeemable preferred stock is reported as a liability.

Accepted Answer

A) True 
 B)False

Question 3

Heidi Aurora Imports issued shares of the company's Class B stock.Heidi Aurora Imports should report the stock in the company's statement of financial position:

Accepted Answer

A) Among liabilities if the shares are mandatorily redeemable or redeemable at the option of the shareholder. 
B) As equity unless the shares are mandatorily redeemable. 
C) As equity unless the shares are redeemable at the option of the issuer. 
D) Among liabilities unless the shares are mandatorily redeemable.

Question 4

Use the following to answer questions 
The 12/31/2016 balance sheet of Despot Inc.included the following:
 
-In February 2016,Despot declared cash dividends of $12 million to be paid in April of that year.What effect did the April transaction have on Despot's accounts?

Accepted Answer

A) Decreased assets and liabilities. 
B) Decreased assets and shareholders' equity. 
C) Increased liabilities and decreased shareholders' equity. 
D) None of these answer choices is correct.

Question 5

ABC declared a property dividend.The dividend consisted of 10,000 common shares of its investment in XYZ Company.The shares had originally been purchased at $4 per share and had a $1 par value.The value of the shares on the declaration date is $7 per share.What is the first entry that should be recorded related to this dividend?

Accepted Answer

The answer of ABC declared a property dividend.The dividend consisted...

Question 6

Any dividend that is considered to be a liquidating dividend will:

Accepted Answer

A) Reduce retained earnings. 
B) Reduce paid-in capital. 
C) Increase paid-in capital. 
D) Reduce the common stock account.

Question 7

The retained earnings balance reported in the balance sheet typically is not affected by:

Accepted Answer

A) Net income. 
B) A prior period adjustment. 
C) Dividends paid. 
D) Restrictions.

Question 8

What ($ in 000s)was shareholders' equity as of December 31,2016?

Accepted Answer

A) $29,600. 
B) $35,600. 
C) $30,400. 
D) $28,600.

Question 9

A statement of comprehensive income does not include:

Accepted Answer

A) Gains resulting from the return on assets exceeding expectations. 
B) Gains and losses on unsold held-to-maturity securities. 
C) Losses resulting from the return on pension assets falling short of expectations. 
D) Prior service cost.

Question 10

Use I = Increase,D = Decrease,or N = No effect,to indicate the effect on total shareholders' equity for each of the listed transactions.
____ A net loss for the year.
____ A stock split effected in the form of a stock dividend.
____ A stock split in which the par per share is reduced (but not effected in the form of a stock
dividend).
____ Declaration of a 5% stock dividend.
____ Declaration of a cash dividend.
____ Issue stock for noncash assets.
____ Payment of previously declared cash dividend.
____ Retirement of common stock at a cost greater than the original issue price.
____ Retirement of common stock at a cost less than the original issue price.
____ Resale of treasury stock for less than book value.

Accepted Answer

The answer of Use I = Increase,D = Decrease,or N...

Question 11

Revenue and expense items and components of other comprehensive income can be reported in a single statement of comprehensive income using:

Accepted Answer

A) U.S.GAAP. 
B) IFRS. 
C) Both U.S.GAAP and IFRS. 
D) Neither U.S.GAAP nor IFRS.

Question 12

F Co.declares a 5% stock dividend.If the market price at declaration is $12 per share,a shareholder with 110 shares likely would receive:

Accepted Answer

A) Five additional shares. 
B) Fractional share rights for 5½ shares. 
C) Five additional shares and $6 in cash. 
D) Five additional shares and a fractional share right for 2½ shares.

Question 13

Use the following to answer questions 
The following information comes from the 2016 Annual Report to stockholders of Composition Inc.(in thousands):
From the Statement of Changes in Stockholders' Equity:
  From the Statement of Cash Flows:
Cash flows from financing activities:
 
-How many shares of treasury stock were removed for use during 2015,and for what purpose(s)?

Accepted Answer

The answer of Use the following to answer questions 
The...

Question 14

The net assets of a corporation are equal to:

Accepted Answer

A) Contributed capital. 
B) Retained earnings. 
C) Shareholders' equity. 
D) None of the above.

Question 15

Use the following to answer questions 
The following partial information is taken from the comparative balance sheet of Levi Corporation:
 
-How many of Levi's common shares were outstanding on 12/31/2015?

Accepted Answer

A) 14 million. 
B) 9 million. 
C) 5 million. 
D) None of these answer choices is correct.

Question 16

Dempsey Company retires shares that it buys back.In its first share repurchase transaction,Dempsey purchased stock for more than the price at which the stock was originally issued.What is the effect of the purchase of the stock on each of the following?

Accepted Answer

The answer of Dempsey Company retires shares that it buys...

Question 17

Treasury stock transactions might cause:

Accepted Answer

A) A decrease in the balance of retained earnings. 
B) An increase in the balance of retained earnings. 
C) An increase or a decrease in the par amount per share. 
D) An increase or a decrease in the amount of net income.

Question 18

The Model Business Corporation Act:

Accepted Answer

A) Uses the words "common" and "preferred" in describing distinguishing characteristics of stock. 
B) Defines legal capital as the amount of net assets not available for distribution to shareholders. 
C) Provides guidance for choosing an appropriate par value for new issues of stock. 
D) Has affected the laws of most states.

Question 19

ZIP Company owns 40,000 shares of the common stock of PIK Company.ZIP decided to divest itself of this investment by distributing the PIK shares in the form of a property dividend.The dividend ratio is one share of PIK for every four shares of ZIP common held by shareholders.ZIP has 160,000 common shares outstanding.On April 15,2016,the date of declaration,PIK stock had a par value of $5 per share,a book value of $12 per share,and a market value of $17 per share.
Required:
Prepare any necessary journal entries.The shares were distributed on May 15,2016,to stockholders of record on May 1,2016.

Accepted Answer

The answer of ZIP Company owns 40,000 shares of the...

Question 20

What ($ in 000s)was shareholders' equity as of December 31,2017?

Accepted Answer

A) $38,100. 
B) $37,450. 
C) $38,450. 
D) $38,350.

Exam 18: Shareholders Equity