Question 1

Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:

Accepted Answer

A)  Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000.
B)  Debit Common Dividends Payable $4,000; credit Cash $4,000.
C)  Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500.
D)  Debit Common Dividends Payable $4,500; credit Cash $4,500.
E)  Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000.F) None of the above
G) C) and D)

Question 2

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

Accepted Answer

A) True 
 B)False

Question 3

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

Accepted Answer

A) True 
 B)False

Question 4

Dividend yield is defined as the annual cash dividends per share divided by the market price per share of a company's stock.

Accepted Answer

A) True 
 B)False

Question 5

Changes in retained earnings are commonly reported in the:

Accepted Answer

A)  Statement of cash flows.
B)  Balance sheet.
C)  Statement of stockholders' equity.
D)  Multiple-step income statement.
E)  Single-step income statement.F) A) and D)
G) All of the above

Question 6

Dividing stockholders' equity applicable to common shares by the number of common shares outstanding yields the book value per common share.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

(1) Number of common shares ou...

Question 8

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

Accepted Answer

A)  Always equal to its par value.
B)  Always equal to its stated value.
C)  Referred to as paid-in capital.
D)  Referred to as retained earnings.
E)  Always below its stated value.F) All of the above
G) A) and E)

Question 9

The cumulative net income and loss not distributed as dividends to a corporation's shareholders is called ______________________.

Accepted Answer

The answer of The cumulative net income and loss not...

Question 10

Shaw Corporation reported stockholders' equity on December 31 of the prior year as follows:  The following selected transactions occurred during the current year:  Prepare a statement of retained earnings as of December 31 of the current year.

Accepted Answer

The answer of Shaw Corporation reported stockholders' equity on December...

Question 11

Pickler Corporation is authorized to issue 2,500,000 shares of $1 par common stock. Prepare journal entries to record the following selected transactions that occurred during this year:

Accepted Answer

The answer of Pickler Corporation is authorized to issue 2,500,000...

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 400 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

Accepted Answer

A)  A debit to Organization Expenses for $4,000.
B)  A debit to Organization Expenses for $5,000.
C)  A credit to Common Stock for $5,000.
D)  A credit to Paid-in Capital in Excess of Par Value, Common Stock for $5,000.
E)  A debit to Paid-in Capital in Excess of Par Value, Common Stock for $2,000.F) B) and D)
G) C) and D)

Question 14

Stocks that pay relatively large cash dividends on a regular basis are called:

Accepted Answer

A)  Small capital stocks.
B)  Mid capital stocks.
C)  Growth stocks.
D)  Large capital stocks.
E)  Income stocks.F) A) and B)
G) A) and C)

Question 15

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

Accepted Answer

A) True 
 B)False

Question 16

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

Accepted Answer

A) True 
 B)False

Question 17

Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the reissuance of treasury stock on July 20 using the cost method?

Accepted Answer

A)  Debit Common Stock $2,300; credit Cash $2,300.
B)  Debit Common Stock $20; debit Treasury Stock $2,290; credit Cash $2,300.
C)  Debit Common Stock $2,300; credit Treasury Stock $2,000; credit Paid-In Capital, Treasury Stock $300.
D)  Debit Cash $2,300; credit Paid-in Capital, Treasury Stock $300; credit Treasury Stock $2,000.
E)  Debit Cash $2,300; credit Treasury Stock $2,300.F) A) and B)
G) All of the above

Question 18

A company issued 60 shares of $100 par value common stock for $7,000 cash. The journal entry to record the issuance is:

Accepted Answer

A)  Debit Cash $7,000; credit Common Stock $7,000.
B)  Debit Investment in Common Stock $7,000; credit Cash $7,000.
C)  Debit Cash $7,000; credit Common Stock $6,000; credit Paid-in Capital in Excess of Par Value, Common Stock $1,000.
D)  Debit Common Stock $6,000, debit Investment in Common Stock $1,000; credit Cash $7,000.
E)  Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000.F) C) and D)
G) A) and B)

Question 19

Corporations may buy back their own stock for any of the following reasons except to:

Accepted Answer

A)  Avoid a hostile take-over.
B)  Have shares available for a merger or acquisition.
C)  Have shares available for employee compensation.
D)  Maintain market value for the company stock.
E)  Allow management to assume the voting rights.F) A) and C)
G) A) and D)

Question 20

If the dividends declared are not recorded as a reduction to Retained Earnings on the date of declaration, the Dividends account is closed to Retained Earnings at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Exam 11: Reporting and Analyzing Equity

The cumulative net income and loss not distributed as dividends to a corporation's shareholders is called ______________________.

Correct Answer
verified

Dividing stockholders' equity applicable to common shares by the number of common shares outstanding yields the book value per common share.

Correct Answer
verified

Changes in retained earnings are commonly reported in the:

Correct Answer
verified

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

Correct Answer
verified

Shaw Corporation reported stockholders' equity on December 31 of the prior year as follows: The following selected transactions occurred during the current year: Prepare a statement of retained earnings as of December 31 of the current year.

Correct Answer
verified

Correct Answer
verified

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

Correct Answer
verified

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

Correct Answer
verified
(1) Number of common shares ou...
View Answer

Corporations may buy back their own stock for any of the following reasons except to:

Correct Answer
verified

Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:

Correct Answer
verified

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

Correct Answer
verified

Dividend yield is defined as the annual cash dividends per share divided by the market price per share of a company's stock.

Correct Answer
verified

Stocks that pay relatively large cash dividends on a regular basis are called:

Correct Answer
verified

A company issued 60 shares of $100 par value common stock for $7,000 cash. The journal entry to record the issuance is:

Correct Answer
verified

Correct Answer
verified

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

Correct Answer
verified

Pickler Corporation is authorized to issue 2,500,000 shares of $1 par common stock. Prepare journal entries to record the following selected transactions that occurred during this year:

Correct Answer
verified

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

Correct Answer
verified

If the dividends declared are not recorded as a reduction to Retained Earnings on the date of declaration, the Dividends account is closed to Retained Earnings at the end of the accounting period.

Correct Answer
verified

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

Correct Answer
verified

Exam 11: Reporting and Analyzing Equity

The cumulative net income and loss not distributed as dividends to a corporation's shareholders is called ______________________.

Correct AnswerverifiedShow Answer

Dividing stockholders' equity applicable to common shares by the number of common shares outstanding yields the book value per common share.

Correct AnswerverifiedShow Answer

Changes in retained earnings are commonly reported in the:

Correct AnswerverifiedShow Answer

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

Correct AnswerverifiedShow Answer

Shaw Corporation reported stockholders' equity on December 31 of the prior year as follows: The following selected transactions occurred during the current year: Prepare a statement of retained earnings as of December 31 of the current year.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

Correct AnswerverifiedShow Answer

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

Correct Answerverified(1) Number of common shares ou...View AnswerShow Answer

Corporations may buy back their own stock for any of the following reasons except to:

Correct AnswerverifiedShow Answer

Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:

Correct AnswerverifiedShow Answer

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

Correct AnswerverifiedShow Answer

Dividend yield is defined as the annual cash dividends per share divided by the market price per share of a company's stock.

Correct AnswerverifiedShow Answer

Stocks that pay relatively large cash dividends on a regular basis are called:

Correct AnswerverifiedShow Answer

A company issued 60 shares of $100 par value common stock for $7,000 cash. The journal entry to record the issuance is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Corporations issue preferred stock to raise capital without sacrificing control of the corporation and/or to boost the return earned by common shareholders.

Correct AnswerverifiedShow Answer

Pickler Corporation is authorized to issue 2,500,000 shares of $1 par common stock. Prepare journal entries to record the following selected transactions that occurred during this year:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the dividends declared are not recorded as a reduction to Retained Earnings on the date of declaration, the Dividends account is closed to Retained Earnings at the end of the accounting period.

Correct AnswerverifiedShow Answer

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
(1) Number of common shares ou...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified