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The balance sheet of Sand Sportswear reports total equity of $500,000 and $650,000 at the beginning and end of the year,respectively.The return on equity for the year is 20%.What is Sand Sportswear's net income for the year?


A) $100,000.
B) $130,000.
C) $2,875,000.
D) $115,000.

E) C) and D)
F) A) and D)

Correct Answer

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The declaration and issuance of a stock dividend:


A) Does not change total assets,liabilities,or total stockholders' equity.
B) Decreases total stockholders' equity and increases common stock.
C) Decreases assets and decreases total stockholders' equity.

D) B) and C)
E) None of the above

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How does the stockholders' equity section in the balance sheet differ from the statement of stockholders' equity?


A) The stockholders' equity section is more detailed than the statement of stockholders' equity.
B) The stockholders' equity section shows balances at a point in time,whereas the statement of stockholders' equity shows activity over a period of time.
C) The stockholders' equity section shows activity over a period of time,whereas the statement of stockholders' equity is at a point time.

D) A) and C)
E) A) and B)

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Clothing Emporium was organized on January 1,2018.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2018,Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.What is the total amount recorded in the Common Stock account at the end of 2018?


A) $420,000.
B) $370,000.
C) $470,000.
D) $250,000.

E) A) and D)
F) None of the above

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A feature common to both stock splits and stock dividends is


A) That there is no effect on total stockholders' equity.
B) A reduction in the contributed capital of a corporation.
C) A transfer to earned capital of a corporation.

D) None of the above
E) A) and C)

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


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) A) and B)
E) All of the above

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


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 these.

E) All of the above
F) A) and D)

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Common stockholders usually have all of the following rights except:


A) To receive dividends when declared.
B) To share in the distribution of assets.
C) To elect board of directors.
D) To participate in the day-to-day operations.

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

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The issuer of a 100% common stock dividend (large stock dividend) to common stockholders should credit common stock for an amount equal to the


A) Book value of the shares issued.
B) Par value of the shares issued.
C) Market value of the shares issued.

D) A) and B)
E) A) and C)

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Crossroads Mall had 100,000 outstanding shares of common stock.On June 16,2018,Crossroads repurchased 20,000 shares of its own stock at $30 per share.On July 23,2018,Crossroads resold 10,000 shares at $28 per share.What net effect did the repurchase and the resell of common stock have on the accounting equation?


A) Increase in assets and decrease in stockholders' equity.
B) Decrease in assets and increase in stockholders' equity.
C) Increase in assets and increase in stockholders' equity.
D) Decrease in assets and decrease in stockholders' equity.

E) B) and C)
F) C) and D)

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The corporation's own stock that has been issued and then repurchased by the company is referred to as:


A) Preferred Stock.
B) Authorized Stock.
C) Treasury Stock.

D) B) and C)
E) A) and C)

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A company issued 1,000 shares of $1 par value preferred stock for $5 per share.What is true about the journal entry to record the issuance?


A) Debit Preferred Stock $5,000.
B) Credit Cash $5,000.
C) Credit Preferred Stock $5,000.
D) Credit Additional Paid-In Capital $4,000.

E) B) and D)
F) B) and C)

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California Clothing reports net income and sales for the year of $65,000 and $1,300,000,respectively.Return on equity is 10%.What is California Clothing's average Stockholders' Equity for the year?


A) $650,000
B) $13,000,000
C) $682,500

D) A) and B)
E) All of the above

Correct Answer

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The balance sheet of California Clothing reports total equity of $600,000 and $700,000 at the beginning and end of the year,respectively.Net income and sales for the year are $65,000 and $1,300,000,respectively.What is California Clothing's return on equity?


A) 10%.
B) 20%.
C) 200%.

D) B) and C)
E) None of the above

Correct Answer

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Par value is the legal capital per share of stock that's assigned when the corporation is first established.

A) True
B) False

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Both cash dividends and stock dividends:


A) Reduce total assets.
B) Reduce total liabilities.
C) Reduce total stockholders' equity.
D) Reduce retained earnings.

E) A) and D)
F) A) and C)

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The return on equity measures the ability of company management to generate earnings from the resources that owners provide.

A) True
B) False

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Jade Jewelers issued 15,000 shares of $1 par value stock for $20 per share.What is true about the journal entry to record the issuance?


A) Credit Common Stock $300,000.
B) Credit Cash $300,000.
C) Credit Common Stock $15,000.

D) A) and B)
E) None of the above

Correct Answer

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The ending Retained Earnings balance of Lambert Inc.increased by $1.5 million from the beginning of the year.The company's net income earned during the year is $3.5 million.What is the amount of dividends Lambert Inc.declared and paid?


A) $1.5 million.
B) $3.5 million.
C) $2.0 million.

D) All of the above
E) A) and C)

Correct Answer

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Wright Inc.issued 20,000 shares of $1 par value common stock for $80,000.The journal entry to record this issuance includes a:


A) Credit to Common Stock for $80,000
B) Debit to Additional Paid-In Capital for $60,000
C) Credit to Cash for $80,000
D) Credit to Common Stock for $20,000

E) A) and C)
F) B) and D)

Correct Answer

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Showing 101 - 120 of 147

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