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Exam 18: Shareholders Equity

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Question 1

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Return on shareholders' equity

A) Similar to an S corporation, but no limit on number of owners.
B) Net income as a percentage of average book value.
C) Paid-in capital and/or retained earnings affected when sold.
D) Preferred practice is to disclose in the notes to the financial statements.
E) Used in evaluating stock performance.

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

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Question 2

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Reverse stock split

A) May be increased when net income increases.
B) A feature of preferred stock.
C) May be reduced when shares are retired.
D) Designed to increase the market value of stock.
E) Reduces the net proceeds from selling shares.

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

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Question 3

Multiple Choice

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Which of the terms or phrases listed below is more associated with financial statements prepared in accordance with U.S. GAAP than with International Financial Reporting Standards (IFRS) ?

The balance sheet of FIFA Cup Company included the following shareholders' equity section at December 31, 2018: On January 5, 2019, FIFA purchased and retired 2 million shares for $9 million. Immediately after retirement of the shares, the balances in the paid-in capital-excess of par and retained earnings accounts are:

The following information comes from the 2018 Annual Report to stockholders of Composition Inc. (in thousands): From the Statement of Changes in Shareholders' Equity: From the Statement of Cash Flows: Cash flows from financing activities: Assuming that Composition had Dividends Payable of $17,450 thousand at December 31, 2016, compute the balance in that account at December 31, 2018.

Rick Co. had 30 million shares of $1 par common stock outstanding at January 1, 2018. In October 2018, Rick Co.'s Board of Directors declared and distributed a 1% common stock dividend when the market value of its common stock was $60 per share. In recording this transaction, Rick would:

On January 1, 2018, Fascom had the following account balances in its shareholders' equity accounts. During 2018, Fascom Inc. had several transactions relating to common stock. Required: Without preparing journal entries, prepare the shareholders' equity section of Fascom's balance sheet as of December 31, 2018. Assume net income is $500,000 for 2018.

Treasury stock transactions never increase retained earnings or net income.

When a property dividend is declared, the reduction in retained earnings is for:

Treasury stock transactions might cause:

Details of each class of stock must be reported:

When stock traded on an active exchange is issued for a machine:

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions.

Preferred shares that are participating may:

Roberto Corporation was organized on January 1, 2018. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2018, Roberto had the following transactions relating to shareholders' equity: Issued 10,000 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. Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8) . What is total shareholders' equity at the end of 2018?

Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions.

The corporate charter sometimes is known as (a) :

Treasury shares are most often reported as:

The owners of a corporation are its shareholders. If a corporation has only one class of shares, they typically are labeled common shares. Each of the following are ownership rights held by common shareholders, unless specifically withheld by agreement, except:

The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 par of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $50,000 in 2018 after paying $20,000 cash dividends in each of 2017 and 2016. What is the amount of dividends common shareholders will receive in 2018?