Question 1

Small stock dividends are recorded by debiting Retained Earnings for the par value per share.

Accepted Answer

A) True 
 B)False

Question 2

Common stock is listed before preferred stock in the balance sheet.

Accepted Answer

A) True 
 B)False

Question 3

Both cash dividends and stock dividends:

Accepted Answer

A)  reduce total assets.
B)  reduce total liabilities.
C)  reduce total stockholders' equity.
D)  reduce retained earnings.E) A) and D)
F) B) and C)

Question 4

When treasury stock is resold at a price below cost:

Accepted Answer

A)  Additional Paid-in Capital is decreased.
B)  Additional Paid-in Capital is increased.
C)  A gain is reported on the income statement.
D)  A loss is reported on the income statement.E) B) and D)
F) A) and C)

Question 5

Which of the following accounts is not reported in the stockholders' equity section of the balance sheet?

Accepted Answer

A)  Treasury Stock.
B)  Common Stock.
C)  Sales Revenue.
D)  Retained Earnings.E) A) and C)
F) B) and D)

Question 6

Preferred stock is called preferred because it usually has two preferences over common stock.These preferences relate to:

Accepted Answer

A)  Dividends and voting rights.
B)  Par value and dividends.
C)  The preemptive right and voting rights.
D)  Dividends and distribution of assets if the corporation is dissolved.E) B) and C)
F) None of the above

Question 7

Contrast the effects of a cash dividend and a stock dividend on total assets,total liabilities,and total stockholders' equity.

Accepted Answer

Declaration and payment of a cash divide...

Question 8

Par value has a direct relationship to the market value of the common stock.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is TRUE regarding the accounting for treasury stock?

Accepted Answer

A)  Treasury stock is reported on the balance sheet in the equity section.
B)  The purchase and sale of treasury stock has no impact on the income statement.
C)  Treasury stock represents a negative equity account.
D)  All of the above are true.E) B) and C)
F) C) and D)

Question 10

Which of the following statements is not true regarding earnings per share?

Accepted Answer

A)  Earnings per share is useful in comparing earnings performance across companies at the same point in time.
B)  Earnings per share is useful in comparing earnings performance for the same company over time.
C)  Earnings per share is calculated as net income minus dividends on preferred stock all divided by the average number of common shares outstanding.
D)  Earnings per share is forecasted by financial analysts.E) B) and D)
F) None of the above

Question 11

Journal entries to record cash dividends are made on the:

Accepted Answer

A)  declaration date,record date,and payment date.
B)  record date and payment date.
C)  declaration date and payment date.
D)  declaration date and record date.E) None of the above
F) A) and B)

Question 12

Retained earnings represent the earnings retained in the corporation - earnings not paid out as dividends to stockholders.

Accepted Answer

A) True 
 B)False

Question 13

Over the first four years of the company's life,it earned the following net income (loss) : $6,000; $3,000; $6,000,and ($2,000) .If the company's ending retained earnings is $10,000 after year 4,what is the average amount of dividends paid per year?

Accepted Answer

A)  $3,000.
B)  $7,000.
C)  $0.
D)  $750.E) C) and D)
F) B) and D)

Question 14

Which of the following is not a potential feature of preferred stock?

Accepted Answer

A)  Convertible.
B)  Redeemable.
C)  Cumulative.
D)  They all are potential features of preferred stock.E) B) and C)
F) A) and B)

Question 15

Hayes Corporation issues 100 shares of its $1 par value common stock for $15 per share.The entry to record the issuance will not include a:

Accepted Answer

A)  Debit to Cash $1,500.
B)  Credit to Additional Paid-In Capital $1,400.
C)  Credit to Common Stock of $100.
D)  All of the other options would be included.E) A) and B)
F) All of the above

Question 16

Earnings per share (EPS)

Accepted Answer

A)  is useful in comparing earnings performance across companies.
B)  is useful in comparing earnings performance for the same company over time.
C)  is useful in both comparing earnings performance across companies and in comparing earnings performance for the same company over time.
D)  is not useful in comparing earnings performance across companies or in comparing earnings performance for the same company over time.E) C) and D)
F) None of the above

Question 17

A corporation has lower taxes and less paperwork relative to sole-proprietorships and partnerships.

Accepted Answer

A) True 
 B)False

Question 18

If a company issues 1,000 shares of $1 par value common stock for $30 per share,what would be the effect on the accounting equation?

Accepted Answer

A)  Increase assets and increase liabilities.
B)  Increase assets and increase revenue.
C)  Increase assets and increase stockholders' equity.
D)  Increase assets and decrease stockholders' equity.E) C) and D)
F) All of the above

Question 19

Retained Earnings:

Accepted Answer

A)  has a normal debit balance.
B)  decreases stockholders' equity.
C)  is equal to the balance in cash.
D)  increases stockholders' equity.E) A) and D)
F) B) and C)

Question 20

We usually record preferred stock as equity and report it in the stockholders' equity section of the balance sheet just above common stock.

Accepted Answer

A) True 
 B)False

Exam 10: Stockholders Equity

Small stock dividends are recorded by debiting Retained Earnings for the par value per share.

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Which of the following accounts is not reported in the stockholders' equity section of the balance sheet?

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If a company issues 1,000 shares of $1 par value common stock for $30 per share,what would be the effect on the accounting equation?

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Earnings per share (EPS)

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Preferred stock is called preferred because it usually has two preferences over common stock.These preferences relate to:

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Both cash dividends and stock dividends:

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Which of the following is TRUE regarding the accounting for treasury stock?

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Which of the following is not a potential feature of preferred stock?

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We usually record preferred stock as equity and report it in the stockholders' equity section of the balance sheet just above common stock.

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A corporation has lower taxes and less paperwork relative to sole-proprietorships and partnerships.

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Journal entries to record cash dividends are made on the:

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Over the first four years of the company's life,it earned the following net income (loss) : $6,000; $3,000; $6,000,and ($2,000) .If the company's ending retained earnings is $10,000 after year 4,what is the average amount of dividends paid per year?

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Retained Earnings:

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When treasury stock is resold at a price below cost:

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Par value has a direct relationship to the market value of the common stock.

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Retained earnings represent the earnings retained in the corporation - earnings not paid out as dividends to stockholders.

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Contrast the effects of a cash dividend and a stock dividend on total assets,total liabilities,and total stockholders' equity.

Correct AnswerverifiedDeclaration and payment of a cash divide...View AnswerShow Answer

Hayes Corporation issues 100 shares of its $1 par value common stock for $15 per share.The entry to record the issuance will not include a:

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Which of the following statements is not true regarding earnings per share?

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Common stock is listed before preferred stock in the balance sheet.

Correct AnswerverifiedShow Answer

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Declaration and payment of a cash divide...
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