Question 1

Treasury stock is classified as:

Accepted Answer

A)   An asset account.
B)   A contra asset account.
C)   A revenue account.
D)   A contra equity account.
E)   A liability account.F) B) and C)
G) A) and E)

Question 2

A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share.The issue price was $10 per share.The entry to record this transaction would be:

Accepted Answer

A)   Debit Cash $50,000; credit Paid-in Capital in Excess of Stated Value, Common Stock $45,000; credit Common Stock $5,000.
B)   Debit Cash $50,000; credit Common Stock $50,000.
C)   Debit Common Stock $50,000; credit Cash $50,000.
D)   Debit Treasury Stock $50,000; credit Cash $50,000.
E)   Debit Common Stock $25,000; debit Paid-in Capital in Excess of Par Value, Common Stock $5,000; credit Common Stock $45,000.F) C) and D)
G) A) and B)

Question 3

A stock dividend,declared by a corporations's directors,is a distribution of additional shares of the corporation's own stock to its stockholders without the receipt of any payment in return.

Accepted Answer

A) True 
 B)False

Question 4

When no-par stock is not assigned a stated value,the total amount received is recorded in the Common Stock account.

Accepted Answer

A) True 
 B)False

Question 5

A stock dividend is recorded with a transfer from:

Accepted Answer

A)   Contributed capital to retained earnings.
B)   Retained earnings to paid-in capital.
C)   Retained earnings to assets.
D)   Contributed capital to assets.
E)   Assets to contributed capital.F) D) and E)
G) C) and D)

Question 6

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

Accepted Answer

A)   Debit Dividend Expense $12,000; credit Cash $12,000.
B)   Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000.
C)   Debit Common Dividend Payable $12,000; credit Cash $12,000.
D)   Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000.
E)   Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.F) C) and D)
G) D) and E)

Question 7

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 E)
G) B) and E)

Question 8

All of the following statements regarding stock dividends are true except:

Accepted Answer

A)   Directors can use stock dividends to keep the market price of the stock affordable.
B)   Stock dividends provide evidence of management's confidence that the company is doing well.
C)   Stock dividends do not reduce assets or equity.
D)   Stock dividends decrease the number of shares outstanding.
E)   Stock dividends transfer a portion of equity from retained earnings to contributed capital.F) B) and D)
G) A) and E)

Question 9

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

Accepted Answer

A)   Noncumulative preferred stock.
B)   Participating preferred stock.
C)   Callable preferred stock.
D)   Cumulative preferred stock.
E)   Convertible preferred stock.F) B) and D)
G) C) and D)

Question 10

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Accepted Answer

A) True 
 B)False

Question 11

Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends.
  Dividend Declared  Year 1$0 Year 2$6,000 Year 3$32,000\begin{array}{l}&	ext { Dividend Declared }\ 	ext { Year } 1 & \$  0 \	ext { Year } 2 & \$  6,000 \	ext { Year } 3 & \$  32,000\end{array} Year 1 Year 2 Year 3​ Dividend Declared $0$6,000$32,000​ 
The amount of dividends paid to preferred and common shareholders in Year 2 is:

Accepted Answer

A)   $3,500 preferred; $2,500 common.
B)   $3,000 preferred; $3,000 common.
C)   $0 preferred; $6,000 common.
D)   $4,200 preferred; $1,800 common.
E)   $6,000 preferred; $0 common. F) C) and D)
G) A) and E)

Question 12

The board of directors of a corporation:

Accepted Answer

A)   Are elected by the corporate registrar.
B)   Are responsible for day-to-day operations of the business.
C)   Do not have the power to bind the corporation to contracts, due to lack of mutual agency.
D)   May not also be executive officers of the corporation, due to the separate entity principle.
E)   Are responsible for and have final authority for managing corporate activities.F) A) and B)
G) A) and C)

Question 13

Common Stock Dividend Distributable is a liability account.

Accepted Answer

A) True 
 B)False

Question 14

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1.Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27.The entry to record the dividend declaration is:

Accepted Answer

A)   Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000.
B)   Debit Retained Earnings $135,000; credit Cash $135,000.
C)   Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000.
D)   Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000.
E)   No entry is made until the stock is issued.F) A) and C)
G) A) and B)

Question 15

What are the rights generally granted to common stockholders?

Accepted Answer

Common stockholders generally have the r...

Question 16

Gracey's Department Stores has $200,000 of 6% noncumulative,nonparticipating,preferred stock outstanding.Gracey's also has $600,000 of common stock outstanding.During its first year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Accepted Answer

A)   $15,000 preferred; $15,000 common.
B)   $6,000 preferred; $24,000 common.
C)   $30,000 preferred; $0 common.
D)   $12,000 preferred; $18,000 common.
E)   $0 preferred; $30,000 common.F) D) and E)
G) B) and D)

Question 17

Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:

Accepted Answer

A)   Cumulative preferred stock.
B)   Callable preferred stock.
C)   Participating preferred stock.
D)   Convertible preferred stock.
E)   Preferential preferred stock.F) A) and B)
G) A) and C)

Question 18

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A reverse stock split increases the market value per share and the par value per share of stock.

Accepted Answer

A) True 
 B)False

Exam 11: Corporate Reporting and Analysis

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

Correct Answer
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A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Correct Answer
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Correct Answer
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What are the rights generally granted to common stockholders?

Correct Answer
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Common stockholders generally have the r...
View Answer

A reverse stock split increases the market value per share and the par value per share of stock.

Correct Answer
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Gracey's Department Stores has $200,000 of 6% noncumulative,nonparticipating,preferred stock outstanding.Gracey's also has $600,000 of common stock outstanding.During its first year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Correct Answer
verified

Treasury stock is classified as:

Correct Answer
verified

When no-par stock is not assigned a stated value,the total amount received is recorded in the Common Stock account.

Correct Answer
verified

A stock dividend is recorded with a transfer from:

Correct Answer
verified

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

Correct Answer
verified

The board of directors of a corporation:

Correct Answer
verified

Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:

Correct Answer
verified

A stock dividend,declared by a corporations's directors,is a distribution of additional shares of the corporation's own stock to its stockholders without the receipt of any payment in return.

Correct Answer
verified

A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share.The issue price was $10 per share.The entry to record this transaction would be:

Correct Answer
verified

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

Correct Answer
verified

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1.Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27.The entry to record the dividend declaration is:

Correct Answer
verified

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

Correct Answer
verified

All of the following statements regarding stock dividends are true except:

Correct Answer
verified

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

Correct Answer
verified

Common Stock Dividend Distributable is a liability account.

Correct Answer
verified

Exam 11: Corporate Reporting and Analysis

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

Correct AnswerverifiedShow Answer

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What are the rights generally granted to common stockholders?

Correct AnswerverifiedCommon stockholders generally have the r...View AnswerShow Answer

A reverse stock split increases the market value per share and the par value per share of stock.

Correct AnswerverifiedShow Answer

Gracey's Department Stores has $200,000 of 6% noncumulative,nonparticipating,preferred stock outstanding.Gracey's also has $600,000 of common stock outstanding.During its first year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Correct AnswerverifiedShow Answer

Treasury stock is classified as:

Correct AnswerverifiedShow Answer

When no-par stock is not assigned a stated value,the total amount received is recorded in the Common Stock account.

Correct AnswerverifiedShow Answer

A stock dividend is recorded with a transfer from:

Correct AnswerverifiedShow Answer

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

Correct AnswerverifiedShow Answer

The board of directors of a corporation:

Correct AnswerverifiedShow Answer

Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:

Correct AnswerverifiedShow Answer

A stock dividend,declared by a corporations's directors,is a distribution of additional shares of the corporation's own stock to its stockholders without the receipt of any payment in return.

Correct AnswerverifiedShow Answer

A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share.The issue price was $10 per share.The entry to record this transaction would be:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1.Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27.The entry to record the dividend declaration is:

Correct AnswerverifiedShow Answer

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

Correct AnswerverifiedShow Answer

All of the following statements regarding stock dividends are true except:

Correct AnswerverifiedShow Answer

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

Correct AnswerverifiedShow Answer

Common Stock Dividend Distributable is a liability account.

Correct AnswerverifiedShow Answer

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Common stockholders generally have the r...
View Answer

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