Question 1

A stock dividend decreases the market price of the company's stock.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements about dividends in arrears is correct?

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

Question 3

The stockholders' equity section of the balance sheet includes all of the following except:

Accepted Answer

A)   Retained Earnings.
B)   Contributed Capital.
C)   Treasury Stock.
D)   Dividends.E) A) and D)
F) None of the above

Question 4

Holders of common stock receive certain benefits,such as a residual claim,which is the:

Accepted Answer

A)   right of stockholders to be paid back for their investment before anyone else if the company ceases operation.
B)   right to oversee management of the company.
C)   right to share in any remaining assets after creditors have been paid off, should the company cease operations.
D)   continuing right to receive a share of the company's profits in the form of dividends.E) B) and D)
F) All of the above

Question 5

Choose the appropriate letter to match the term and the definition.Not all definitions will be used.
Term:
1._____ Treasury Stock
2._____ Cash Dividend
3._____ IPO
4._____ Preferred Stock
5._____ Outstanding Shares
6._____ EPS
7._____ Stock Dividend
8._____ Residual Claim
9._____ ROE
Definition:
A.When a company first starts selling stock to the public.
B.The additional shares of stock a company can issue beyond what are already issued.
C.Earnings per share that reflects treasury and preferred stock.
D.This payment raises stockholders' equity.
E.(Net income less preferred dividends)divided by average stockholders' equity.
F.The shares of stock held by stockholders.
G.Stock shares that pay a fixed dividend rate but have no voting rights.
H.(Net income less preferred dividends)divided by the average number of outstanding common shares.
I.Stock that allows owners to be listed among creditors.
J.This dividend does not reduce stockholders' equity.
K.The shares of stock held by the issuing company.
L.Stockholders' entitlement to remaining assets after creditors are repaid.
M.This payment decreases stockholders' equity.

Accepted Answer

1.K
2.M
3....

Question 6

Morris Lest recorded the closing entries for his sole proprietorship.The entry to close the M.Lest,Drawings account requires a:

Accepted Answer

A)   debit to M. Lest, Capital.
B)   debit to M. Lest, Drawings.
C)   debit to M. Lest, Retained Earnings.
D)   credit to M. Lest, Capital.E) None of the above
F) A) and C)

Question 7

Refurbish,Inc.reissued 1,000 shares of its treasury stock for $10,000.Prior to the reissuance,the Treasury Stock balance was $12,000,which included the $8,000 cost of the 1,000 shares reissued.After recording this transaction:

Accepted Answer

A)   Treasury Stock will equal $4,000.
B)   Treasury Stock will equal $2,000.
C)   Additional Paid-in Capital will be increased by $12,000.
D)   Cash will be decreased by $10,000.E) All of the above
F) B) and D)

Question 8

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Accepted Answer

A)   increase total liabilities and decrease stockholders' equity.
B)   increase total expenses and decrease assets.
C)   increase total assets and increase stockholders' equity.
D)   decrease total assets and decrease stockholders' equity.E) A) and B)
F) A) and C)

Question 9

Which of the following is correct about reissuing treasury stock?

Accepted Answer

A)   If treasury stock is sold at a higher price than the stock's cost when the company reacquired it, a gain will be recognized.
B)   If treasury stock is sold at a higher price than the stock's par value, a gain will be recognized.
C)   If the treasury stock is sold at a lower price than the amount of the original issuance, a loss will be recognized.
D)   A gain or loss on the reissuance of treasury stock is never recognized.E) A) and C)
F) All of the above

Question 10

A company issues 100,000 shares of preferred stock for $40 a share.The stock has fixed annual dividend rate of 5% and a par value of $3 per share.If sufficient dividends are declared,preferred stockholders can anticipate receiving dividends of:

Accepted Answer

A)   $5,000 each year.
B)   $15,000 each year.
C)   5% of net income each year.
D)   $3 per share.E) None of the above
F) All of the above

Question 11

The Enterprise Co.has the following information available from its accounting records:

The company has no preferred stock.What is the return on equity?

Accepted Answer

A)   40%
B)   44%
C)   49%
D)   467%E) A) and B)
F) A) and C)

Question 12

Bank,Rupp & Baroque,Inc.began on January 1,2015 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value,6% cumulative preferred stock.No dividends were declared in 2015 or 2016.Which of the following statements about this situation is correct?

Accepted Answer

A)   Dividends Payable should be reported on the December 31, 2015 balance sheet.
B)   Dividends Payable should be reported on the December 31, 2016 balance sheet.
C)   Dividends in arrears should be disclosed in the notes to the 2015 and 2016 financial statements.
D)   Dividends expense should be reported on the income statement for the year ended December 31, 2015.E) None of the above
F) A) and C)

Question 13

The laws governing corporations:

Accepted Answer

A)   require that a company be incorporated in the state in which it does most of its business.
B)   require that all companies in Delaware be incorporated.
C)   allow a company to be incorporated in a different state from the one in which it operates.
D)   require that all companies be incorporated in Delaware.E) A) and B)
F) A) and C)

Question 14

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 per share for its treasury stock.
Required:
Determine the missing amount in the stockholders' equity section of the balance sheet set forth below.
  
(a)________
(b)________
(c)________
(d)________
(e)________
(f)________
(g)________

Accepted Answer

Supporting calculations:
(a)$2.00 Par ...

Question 15

Which of the following below correctly states the sequence of dates related to dividends on common stock?

Accepted Answer

A)   Board of directors date, Date of declaration, Date of payment
B)   Declaration date, Date of record, Date of payment
C)   Date of record -Declaration date, Date of payment
D)   Declaration date, Date of Payment, Date of distributionE) A) and B)
F) C) and D)

Question 16

Company Z has 8 million shares of common stock authorized with a par value of $1 and a market price of $72.There are 4 million outstanding shares and 1 million shares held in treasury stock.
Required:
Part a.Prepare the journal entry if the company declares and distributes a 10% stock dividend.
Part b.Show the effect of the 10% stock dividend on assets,liabilities,and stockholders' equity.
Part c.Prepare the journal entry if the company declares and distributes a 100% stock dividend.
Part d.Show the effect of the 100% stock dividend on assets,liabilities,and stockholders' equity.

Accepted Answer

Part a
Declaration and distrib...

Question 17

A liability for dividends is recorded on the date of record.

Accepted Answer

A) True 
 B)False

Question 18

Lenders will sometimes impose dividend restrictions to:

Accepted Answer

A)   prevent the corporation from paying out too much to stockholders.
B)   try to limit available dividends.
C)   prevent the corporation from paying out too much to other creditors.
D)   ensure the lenders will receive more dividends than the stockholders.E) A) and D)
F) C) and D)

Question 19

How do stock splits and stock dividends impact Retained Earnings?

Accepted Answer

A)   Stock splits increase Retained Earnings and stock dividends have no effect on Retained Earnings.
B)   Stock splits have no effect on Retained Earnings and stock dividends decrease Retained Earnings.
C)   Stock splits and stock dividends both decrease Retained Earnings.
D)   Stock splits and stock dividends have no effect on Retained Earnings.E) A) and D)
F) A) and C)

Question 20

Use the information above to answer the following question.What journal entry will record the purchase of the stock on January 20?

Accepted Answer

A)   Debit Treasury Stock for $8,000, debit Additional Paid-in Capital for $24,000, and credit Cash for $32,000
B)   Debit Treasury Stock and credit Cash for $32,000
C)   Debit Treasury Stock for $8,000, debit Common Stock for $24,000, and credit Cash for $32,000
D)   Debit Common Stock and credit Cash for $32,000E) A) and D)
F) B) and C)

Exam 11: Reporting and Interpreting Stockholders Equity

Correct Answer
verified
Part a
Declaration and distrib...
View Answer

A stock dividend decreases the market price of the company's stock.

Correct Answer
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Refurbish,Inc.reissued 1,000 shares of its treasury stock for $10,000.Prior to the reissuance,the Treasury Stock balance was $12,000,which included the $8,000 cost of the 1,000 shares reissued.After recording this transaction:

Correct Answer
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Correct Answer
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Supporting calculations:
(a)$2.00 Par ...
View Answer

Bank,Rupp & Baroque,Inc.began on January 1,2015 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value,6% cumulative preferred stock.No dividends were declared in 2015 or 2016.Which of the following statements about this situation is correct?

Correct Answer
verified

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Correct Answer
verified

Use the information above to answer the following question.What journal entry will record the purchase of the stock on January 20?

Correct Answer
verified

Correct Answer
verified
1.K
2.M
3....
View Answer

The laws governing corporations:

Correct Answer
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Holders of common stock receive certain benefits,such as a residual claim,which is the:

Correct Answer
verified

The stockholders' equity section of the balance sheet includes all of the following except:

Correct Answer
verified

How do stock splits and stock dividends impact Retained Earnings?

Correct Answer
verified

Which of the following statements about dividends in arrears is correct?

Correct Answer
verified

A company issues 100,000 shares of preferred stock for $40 a share.The stock has fixed annual dividend rate of 5% and a par value of $3 per share.If sufficient dividends are declared,preferred stockholders can anticipate receiving dividends of:

Correct Answer
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Which of the following below correctly states the sequence of dates related to dividends on common stock?

Correct Answer
verified

A liability for dividends is recorded on the date of record.

Correct Answer
verified

Lenders will sometimes impose dividend restrictions to:

Correct Answer
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The Enterprise Co.has the following information available from its accounting records: The company has no preferred stock.What is the return on equity?

Correct Answer
verified

Morris Lest recorded the closing entries for his sole proprietorship.The entry to close the M.Lest,Drawings account requires a:

Correct Answer
verified

Which of the following is correct about reissuing treasury stock?

Correct Answer
verified

Exam 11: Reporting and Interpreting Stockholders Equity

Correct AnswerverifiedPart aDeclaration and distrib...View AnswerShow Answer

A stock dividend decreases the market price of the company's stock.

Correct AnswerverifiedShow Answer

Refurbish,Inc.reissued 1,000 shares of its treasury stock for $10,000.Prior to the reissuance,the Treasury Stock balance was $12,000,which included the $8,000 cost of the 1,000 shares reissued.After recording this transaction:

Correct AnswerverifiedShow Answer

Correct Answerverified Supporting calculations:(a)$2.00 Par ...View AnswerShow Answer

Bank,Rupp & Baroque,Inc.began on January 1,2015 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value,6% cumulative preferred stock.No dividends were declared in 2015 or 2016.Which of the following statements about this situation is correct?

Correct AnswerverifiedShow Answer

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.What journal entry will record the purchase of the stock on January 20?

Correct AnswerverifiedShow Answer

Correct Answerverified1.K2.M3....View AnswerShow Answer

The laws governing corporations:

Correct AnswerverifiedShow Answer

Holders of common stock receive certain benefits,such as a residual claim,which is the:

Correct AnswerverifiedShow Answer

The stockholders' equity section of the balance sheet includes all of the following except:

Correct AnswerverifiedShow Answer

How do stock splits and stock dividends impact Retained Earnings?

Correct AnswerverifiedShow Answer

Which of the following statements about dividends in arrears is correct?

Correct AnswerverifiedShow Answer

A company issues 100,000 shares of preferred stock for $40 a share.The stock has fixed annual dividend rate of 5% and a par value of $3 per share.If sufficient dividends are declared,preferred stockholders can anticipate receiving dividends of:

Correct AnswerverifiedShow Answer

Which of the following below correctly states the sequence of dates related to dividends on common stock?

Correct AnswerverifiedShow Answer

A liability for dividends is recorded on the date of record.

Correct AnswerverifiedShow Answer

Lenders will sometimes impose dividend restrictions to:

Correct AnswerverifiedShow Answer

The Enterprise Co.has the following information available from its accounting records: The company has no preferred stock.What is the return on equity?

Correct AnswerverifiedShow Answer

Morris Lest recorded the closing entries for his sole proprietorship.The entry to close the M.Lest,Drawings account requires a:

Correct AnswerverifiedShow Answer

Which of the following is correct about reissuing treasury stock?

Correct AnswerverifiedShow Answer

Correct Answer
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Part a
Declaration and distrib...
View Answer

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Supporting calculations:
(a)$2.00 Par ...
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1.K
2.M
3....
View Answer

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