Question 1

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

Question 2

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) A) and C)
F) None of the above

Question 3

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) All of the above
F) None of the above

Question 4

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) A) and C)

Question 5

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 C)
F) A) and B)

Question 6

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) A) and B)
F) B) and D)

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

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) All of the above
F) C) and D)

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) A) and C)
F) All of the above

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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) A) and B)
F) B) and D)

Question 13

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) A) and B)

Question 14

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) None of the above
F) B) and C)

Question 15

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) None of the above
F) B) and D)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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) None of the above
F) B) and C)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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) A) and C)
F) A) and B)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 10: Stockholders Equity

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Earnings per share (EPS)

Correct AnswerverifiedShow Answer

Both cash dividends and stock dividends:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

When treasury stock is resold at a price below cost:

Correct AnswerverifiedShow Answer

Retained Earnings:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Journal entries to record cash dividends are made on the:

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Declaration and payment of a cash divide...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified