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Exam 10: Stockholders Equity

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Question 71

True/False

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Treasury stock is a contra-equity account because treasury stock increases total stockholders' equity.Treasury stock is a contra-equity account because treasury stock decreases total stockholders' equity.

A) True
B) False

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Question 72

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When treasury stock is resold at a gain,the difference between its cost and the cash received when resold:

A) Increases net income.
B) Increases stockholders' equity.
C) Has no effect on net income or stockholders' equity.

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

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Question 73

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Retained Earnings is the amount stockholders have invested in the company.Paid-in capital is the amount stockholders have invested in the company.

Angel investors are investors that focus on companies at or near bankruptcy.Angel investors are wealthy individuals in the business community willing to risk investment funds on a promising business venture.

Preferred stock:

Over the first four years of the company's life,the company 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?

Which of the following financing alternatives has the highest preference of payment in a case where the company liquidates its assets?

A company reissues 400 shares of its own common stock for $20 per share.The company had acquired these shares two months before for $15 per share.The reissuance of this stock would be recorded with a:

On December 2,Coley Corp.acquired 1,000 shares of its $2 par value common stock for $27 each.On December 20,Coley Corp.reissued 400 shares for $15 each.Which of the following is correct regarding the journal entry for the reissued shares?

When treasury stock is acquired,what is the effect on total stockholders' equity?

Retained Earnings represent a company's:

Total assets,total liabilities,and total stockholders' equity do not change as a result of a stock dividend.

On November 6,Coleman Corp.acquired 1,000 shares of its $2 par value common stock for $27 each.On November 20,Coleman Corp.reissued 400 shares for $30 each.Which of the following is correct regarding the effect of the journal entry for the reissued shares?

If a company has expenses that are more than revenues,the net loss decreases retained earnings.

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

Financial information for Accessories Unlimited includes the following selected data: What is the company's earnings per share? $\begin{array} { | l r | } \hline \text { Net income (in millions) } & \$ 150 \\\hline \text { Shares outstanding (in millions) } & 300 \\\text { Stock price } & \$ 20.00 \\\hline\end{array}$

Assets plus liabilities equal stockholders' equity.Assets equal liabilities plus stockholders' equity.

Which of the following is the most likely to have voting rights?

A corporation has limited liability and attracting outside investment is easier relative to sole-proprietorships and partnerships.Two advantages of a corporation relative to sole-proprietorships and partnerships are (1)limited liability and (2)the ability to raise capital and transfer ownership.

A company credits Additional Paid-in Capital for the portion of the cash proceeds above par value received for the issuance of stock.