Question 1

Which one of the following statements regarding earnings per share (EPS) is true?

Accepted Answer

A)  The EPS ratio is important because it signals the ability of the company to pay future dividends,which investors factor into the stock price.
B)  Earnings per share is generally reported in the balance sheet under stockholders' equity.
C)  Earnings per share is the best way to compare the performance of different companies.
D)  EPS,in its basic form,is calculated by dividing net income by the average number of all shares issued.E) A) and B)
F) B) and D)

Question 2

The right of current stockholders to purchase additional shares of newly issued stock in order to maintain the same percentage ownership is called:

Accepted Answer

A)  liquidation.
B)  preemptive rights.
C)  cumulative preference.
D)  voting rights.E) A) and C)
F) All of the above

Question 3

One of the advantages of a partnership is:

Accepted Answer

A)  limited liability.
B)  the salaries of the partners can be written off as an expense.
C)  ease of formation.
D)  income tax is paid by the business.E) All of the above
F) B) and C)

Question 4

Features of common stock usually include all of the following except:

Accepted Answer

A)  voting rights.
B)  dividends.
C)  primary claim to the company's assets in case of liquidation.
D)  preemptive right.E) A) and C)
F) B) and D)

Question 5

The market price of a share of common stock at the time of issuance was $19.50,while the market price of a preferred share of stock at the time of issuance was $32.The company paid $12.50 for its treasury stock.Fill in the missing stockholders' equity information below.

Accepted Answer

The answer of The market price of a share of...

Question 6

Which of the following statements about stock dividends is true?

Accepted Answer

A)  Stock dividends are reported on the income statement.
B)  Stock dividends are reported on the Statement of Stockholders' Equity.
C)  Stock dividends increase total stockholders' equity.
D)  Stock dividends decrease total stockholders' equity.E) A) and C)
F) A) and B)

Question 7

Phelps,Inc. ,had assets of $67,646 and liabilities of $15,466 at the close of 2013 with 10,718 shares of outstanding common stock.Net income for 2013 was $7,829.At the end of 2014,assets were $79,571,liabilities were $18,551,and the company had 10,771 shares of outstanding stock trading at a price of $10 per share.Net income for 2014 was $9,993.
a.Calculate EPS for 2014.
b.Calculate ROE for 2014.
c.Calculate the Price/Earnings Ratio for 2014.

Accepted Answer

a.EPS = Net income/Average number of out...

Question 8

Which of the following statements regarding repurchased stock is true?

Accepted Answer

A)  It is generally less costly for a company to give employees repurchased shares than to issue new shares.
B)  When a company records a stock repurchase,it is tracking a stockholder's sale of stock to another investor.
C)  Treasury stock is reported on the balance sheet as an asset.
D)  Treasury stock is repurchased stock that has been authorized but is not issued.E) All of the above
F) A) and C)

Question 9

Income tax expense would be found on the income statement of a corporation,but not on the income statement of a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 10

Stock dividends and stock splits are similar in all of the following ways except

Accepted Answer

A)  they both involve a pro rata distribution of shares to existing stockholders.
B)  they both reduce the stock price.
C)  they both decrease retained earnings.
D)  have no effect on cash.E) None of the above
F) A) and B)

Question 11

Use the information above to answer the following question.If the company pays the fixed dividend on the preferred stock,the transaction will:

Accepted Answer

A)  decrease Preferred stock by $20,000.
B)  decrease Retained earnings by $600,000.
C)  decrease Cash by $20,000.
D)  increase Liabilities by $20,000.E) None of the above
F) B) and D)

Question 12

On February 16,a company declares a 34¢ dividend to be paid on April 5.There are 2 million shares of common stock issued and 100,000 shares of treasury stock.What does the company record on April 5?

Accepted Answer

A)  A debit to Dividends Payable and a credit to Cash for $680,000.
B)  A debit to Dividends Declared and a credit to Dividends Payable for $646,000.
C)  A debit to Dividends Payable and a credit to Cash for $646,000.
D)  A debit to Dividends Declared and a credit to Dividends Payable for $680,000.E) A) and B)
F) All of the above

Question 13

If a company's P/E ratio is 12.5 and the company's stock price is $17.50 per share then the company's EPS is:

Accepted Answer

A)  $0.71.
B)  $1.40.
C)  $5.00.
D)  $0.40.E) None of the above
F) A) and D)

Question 14

McBean Company has outstanding 10 million shares of $2 par value common stock and 1 million shares of $4 par value preferred stock.The preferred stock has a 7% dividend rate.The company declares $600,000 in total dividends for the year.Dividends in arrears are $30,000.Compute the amount of dividends to be distributed to:
a.preferred shareholders
b.common shareholders

Accepted Answer

a.
Current preferred dividend = 1,000,00...

Question 15

Which of the following statements regarding dividends in arrears is true?

Accepted Answer

A)  Dividends in arrears do not appear on the balance sheet or require a journal entry.
B)  Dividends in arrears are not disclosed to stockholders.
C)  Dividends in arrears applies to common stock.
D)  Dividends in arrears are legal liabilities.E) A) and C)
F) None of the above

Question 16

A company issued 8% preferred stock with a $100 par value.This means:

Accepted Answer

A)  Preferred stockholders are entitled to 8% of the annual net income.
B)  Only 8% of total contributed capital can be preferred stock.
C)  Preferred stockholders are guaranteed a dividend.
D)  The potential dividend to preferred stockholders is $8 per share per year.E) C) and D)
F) All of the above

Question 17

Use the information above to answer the following question.If the company pays a $100,000 dividend,and the preferred stock is cumulative and three years' dividends are in arrears,what is the amount the preferred stockholders will receive?

Accepted Answer

A)  $18,000
B)  $24,000
C)  $6,000
D)  $54,000E) A) and C)
F) C) and D)

Question 18

You form a partnership with your best friend.You have contributed 65% of the capital and can claim 65% of the net income.At the end of the first year,you discover that your partner has run up $40,000 in debt using the business' credit card.The maximum you could be liable for is:

Accepted Answer

A)  $0.
B)  $40,000.
C)  $20,000.
D)  $26,000.E) C) and D)
F) A) and B)

Question 19

Which of the following statements is not true of a corporation?

Accepted Answer

A)  A corporation is taxed as a separate legal entity.
B)  A corporation has easy transferability of ownership.
C)  A corporation may have the ability to raise large amounts of capital.
D)  A corporation's owners have unlimited liability.E) C) and D)
F) None of the above

Question 20

Use the information above to answer the following question.What is the journal entry to record the reissuance on July 3?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) A) and C)
F) A) and D)

Exam 11: Stockholders Equity

Which of the following statements regarding repurchased stock is true?

Correct Answer
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On February 16,a company declares a 34¢ dividend to be paid on April 5.There are 2 million shares of common stock issued and 100,000 shares of treasury stock.What does the company record on April 5?

Correct Answer
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Use the information above to answer the following question.If the company pays the fixed dividend on the preferred stock,the transaction will:

Correct Answer
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Which of the following statements is not true of a corporation?

Correct Answer
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Which one of the following statements regarding earnings per share (EPS) is true?

Correct Answer
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Correct Answer
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a.EPS = Net income/Average number of out...
View Answer

Income tax expense would be found on the income statement of a corporation,but not on the income statement of a sole proprietorship.

Correct Answer
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The market price of a share of common stock at the time of issuance was $19.50,while the market price of a preferred share of stock at the time of issuance was $32.The company paid $12.50 for its treasury stock.Fill in the missing stockholders' equity information below.

Correct Answer
verified

You form a partnership with your best friend.You have contributed 65% of the capital and can claim 65% of the net income.At the end of the first year,you discover that your partner has run up $40,000 in debt using the business' credit card.The maximum you could be liable for is:

Correct Answer
verified

Use the information above to answer the following question.If the company pays a $100,000 dividend,and the preferred stock is cumulative and three years' dividends are in arrears,what is the amount the preferred stockholders will receive?

Correct Answer
verified

One of the advantages of a partnership is:

Correct Answer
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Features of common stock usually include all of the following except:

Correct Answer
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The right of current stockholders to purchase additional shares of newly issued stock in order to maintain the same percentage ownership is called:

Correct Answer
verified

Which of the following statements about stock dividends is true?

Correct Answer
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Which of the following statements regarding dividends in arrears is true?

Correct Answer
verified

If a company's P/E ratio is 12.5 and the company's stock price is $17.50 per share then the company's EPS is:

Correct Answer
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Stock dividends and stock splits are similar in all of the following ways except

Correct Answer
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A company issued 8% preferred stock with a $100 par value.This means:

Correct Answer
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Use the information above to answer the following question.What is the journal entry to record the reissuance on July 3?

Correct Answer
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Correct Answer
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a.
Current preferred dividend = 1,000,00...
View Answer

Exam 11: Stockholders Equity

Which of the following statements regarding repurchased stock is true?

Correct AnswerverifiedShow Answer

On February 16,a company declares a 34¢ dividend to be paid on April 5.There are 2 million shares of common stock issued and 100,000 shares of treasury stock.What does the company record on April 5?

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.If the company pays the fixed dividend on the preferred stock,the transaction will:

Correct AnswerverifiedShow Answer

Which of the following statements is not true of a corporation?

Correct AnswerverifiedShow Answer

Which one of the following statements regarding earnings per share (EPS) is true?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.EPS = Net income/Average number of out...View AnswerShow Answer

Income tax expense would be found on the income statement of a corporation,but not on the income statement of a sole proprietorship.

Correct AnswerverifiedShow Answer

The market price of a share of common stock at the time of issuance was $19.50,while the market price of a preferred share of stock at the time of issuance was $32.The company paid $12.50 for its treasury stock.Fill in the missing stockholders' equity information below.

Correct AnswerverifiedShow Answer

You form a partnership with your best friend.You have contributed 65% of the capital and can claim 65% of the net income.At the end of the first year,you discover that your partner has run up $40,000 in debt using the business' credit card.The maximum you could be liable for is:

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.If the company pays a $100,000 dividend,and the preferred stock is cumulative and three years' dividends are in arrears,what is the amount the preferred stockholders will receive?

Correct AnswerverifiedShow Answer

One of the advantages of a partnership is:

Correct AnswerverifiedShow Answer

Features of common stock usually include all of the following except:

Correct AnswerverifiedShow Answer

The right of current stockholders to purchase additional shares of newly issued stock in order to maintain the same percentage ownership is called:

Correct AnswerverifiedShow Answer

Which of the following statements about stock dividends is true?

Correct AnswerverifiedShow Answer

Which of the following statements regarding dividends in arrears is true?

Correct AnswerverifiedShow Answer

If a company's P/E ratio is 12.5 and the company's stock price is $17.50 per share then the company's EPS is:

Correct AnswerverifiedShow Answer

Stock dividends and stock splits are similar in all of the following ways except

Correct AnswerverifiedShow Answer

A company issued 8% preferred stock with a $100 par value.This means:

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.What is the journal entry to record the reissuance on July 3?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Current preferred dividend = 1,000,00...View AnswerShow Answer

Correct Answer
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a.EPS = Net income/Average number of out...
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a.
Current preferred dividend = 1,000,00...
View Answer