Question 1

The number of shares issued represents the number of shares:

Accepted Answer

A)  sold.
B)  repurchased.
C)  the company is allowed to sell.
D)  sold less repurchased.E) All of the above
F) A) and C)

Question 2

Yamhill,Inc.began on January 1,2016 by issuing 200,000 shares of $1 par value common stock and 2,000 shares of $100 par value,5%,cumulative preferred stock.No dividends were declared in 2016 or 2017.In 2018,Yamhill declared and paid the preferred stockholders and a $0.50 dividend to its common stockholders.Assuming all shares originally issued are outstanding,the total dividend declared and paid in 2018 equals:

Accepted Answer

A)  $130,000.
B)  $101,000.
C)  $110,000.
D)  $100,000.E) All of the above
F) C) and D)

Question 3

Match each term with the appropriate definition.Not all definitions will be used.
-Market Value

Accepted Answer

A)  A company that is like a partnership in nature except that it has limited liability.
B)  A company that has a separate legal identity from its owners.
C)  A company that issues stock on one of the major stock exchanges.
D)  When companies are obligated to pay preferred stockholders past dividends not yet distributed before paying dividends to owners of common stock.
E)  The nominal value per share of stock set by the company's charter.F) The current stock price.G) A stock that is currently selling for its original issue price.H) Stock of companies that tend to pay relatively high dividends compared to the stock price.I) Stock of companies that tend to reinvest earnings to provide for greater future sales and profits.J) When stockholders prefer to receive dividends at the end of the year rather than each quarter.K) An unincorporated business that is owned by a single individual.L) When preferred stockholders are paid dividends before other stockholders.M) An unincorporated business owned by two or more individuals.N) A) and I)
O) G) and M)

Question 4

In an IPO on May 1,2012,Timmy Hilfigure purchased 1,000 shares of Abner Crummie,Inc.for $5,000.On April 30,2018,Timmy Hilfigure sold the 1,000 shares for $8,000 to Ralph Loring.What is the effect of the sale on April 30,2018?

Accepted Answer

A)  Abner Crummie,Inc.will record a $3,000 loss.
B)  Abner Crummie,Inc.will record a $3,000 gain.
C)  Abner Crummie,Inc.will not be directly affected by this transaction.
D)  Abner Crummie,Inc.will record a decrease in Cash of $8,000.E) B) and D)
F) B) and C)

Question 5

At the end of the accounting period,but before the closing entries have been recorded,Doug,the proprietor of Pepper's Cafe,has a debit of $12,250 in his drawing account and a credit of $63,400 in his capital account.If his capital account has a credit balance of $68,950 after the closing,what was his net income?

Accepted Answer

A)  $5,550
B)  $17,800
C)  $56,700
D)  $6,700E) B) and C)
F) A) and B)

Question 6

On February 16,Hawthorne Co.declares a $1.36 dividend to be paid on April 5.There are 1,900,000 shares of common stock issued and outstanding.The entry recorded by the company on April 5 includes a debit to:

Accepted Answer

A)  A debit to Dividends Payable and a credit to Cash for $2,720,000.
B)  A debit to Dividends and a credit to Dividends Payable for $2,584,000.
C)  A debit to Dividends Payable and a credit to Cash for $2,584,000.
D)  A debit to Dividends and a credit to Dividends Payable for $2,720,000.E) B) and C)
F) None of the above

Question 7

Which of the following organizations is required by law to apply for a charter?

Accepted Answer

A)  Sole proprietorship
B)  Partnership
C)  Any for-profit business
D)  CorporationE) C) and D)
F) B) and D)

Question 8

Dividends in arrears are reported as current liabilities on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

Nova,Inc.is considering declaring a $100,000 cash dividend.Nova has a cash balance of $20,000 and Retained Earnings balance of $100,000.Nova should:

Accepted Answer

A)  declare a cash dividend because it has enough Retained Earnings and cash.
B)  declare a cash dividend because it has enough Retained Earnings.
C)  not declare a cash dividend because it does not have enough Retained Earnings.
D)  not declare a cash dividend because it does not have enough cash.E) B) and C)
F) B) and D)

Question 10

Advantages of equity financing over debt financing include that:

Accepted Answer

A)  dividends are mandatory.
B)  equity financing does not require repayment.
C)  dividends are tax deductible.
D)  stockholders' control will increase.E) A) and D)
F) B) and D)

Question 11

Cholla Co.issued 20,000 shares of no-par value common stock at $10 per share.Mr.Ivanhoe,the bookkeeper,recorded the transaction with a $200,000 debit to Cash and $200,000 credit to Common Stock.Which of the following statements about this situation is correct?

Accepted Answer

A)  Total assets will be overstated.
B)  This entry is correct.
C)  Total stockholders' equity will be overstated.
D)  Total liabilities will be understated.E) All of the above
F) A) and D)

Question 12

Before dividends can be paid to common stockholders,if the preferred stock is ________,any ________ must be paid to the preferred stockholders.

Accepted Answer

A)  cumulative;dividends in arrears
B)  current;interest owed
C)  cumulative;interest owed
D)  managing;dividendsE) All of the above
F) A) and D)

Question 13

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) All of the above
F) None of the above

Question 14

Match each term with the appropriate definition.Not all definitions will be used.
-LLC

Accepted Answer

A)  A company that is like a partnership in nature except that it has limited liability.
B)  A company that has a separate legal identity from its owners.
C)  A company that issues stock on one of the major stock exchanges.
D)  When companies are obligated to pay preferred stockholders past dividends not yet distributed before paying dividends to owners of common stock.
E)  The nominal value per share of stock set by the company's charter.F) The current stock price.G) A stock that is currently selling for its original issue price.H) Stock of companies that tend to pay relatively high dividends compared to the stock price.I) Stock of companies that tend to reinvest earnings to provide for greater future sales and profits.J) When stockholders prefer to receive dividends at the end of the year rather than each quarter.K) An unincorporated business that is owned by a single individual.L) When preferred stockholders are paid dividends before other stockholders.M) An unincorporated business owned by two or more individuals.N) A) and H)
O) G) and J)

Question 15

When a company reissues (or sells)shares of its treasury stock at an amount different than its cost,it reports a gain or a loss on the sale.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements about stock dividends is correct?

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

Question 17

Gladstone Company issues 200,000 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)  $10,000 each year.
B)  $30,000 each year.
C)  5% of net income each year.
D)  $3 per share.E) A) and B)
F) C) and D)

Question 18

If a corporation declares and distributes a stock dividend on its common shares:

Accepted Answer

A)  the amount of total assets increases.
B)  stockholders' equity decreases.
C)  contributed capital decreases.
D)  the account Retained Earnings is decreased.E) B) and C)
F) All of the above

Question 19

A corporation had 50,000 shares of $20 par value common stock outstanding.The board of directors declared and issued a 50% stock dividend.The market value of the stock was $27 per share.What is the journal entry to record this stock dividend?

Accepted Answer

A)  Debit Retained Earnings and credit Common Stock for $675,000.
B)  Debit Retained Earnings and credit Common Stock for $500,000.
C)  Debit Retained Earnings and credit Cash for $675,000.
D)  No entry is made to record the stock dividend.E) A) and B)
F) B) and D)

Question 20

Which of the following statements about dividends is correct?

Accepted Answer

A)  Companies sometimes issue stock dividends to lower the market price per share of stock.
B)  Stock dividends immediately increase the total value of the stockholders' investment.
C)  Cash dividends and stock dividends both decrease total stockholders' equity.
D)  A corporation has a legal obligation to pay dividends each year.E) C) and D)
F) None of the above

Exam 11: Stockholders Equity

Gladstone Company issues 200,000 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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A corporation had 50,000 shares of $20 par value common stock outstanding.The board of directors declared and issued a 50% stock dividend.The market value of the stock was $27 per share.What is the journal entry to record this stock dividend?

Correct Answer
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Which of the following organizations is required by law to apply for a charter?

Correct Answer
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Dividends in arrears are reported as current liabilities on the balance sheet.

Correct Answer
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Correct Answer
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Match each term with the appropriate definition.Not all definitions will be used. -LLC

Correct Answer
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If a corporation declares and distributes a stock dividend on its common shares:

Correct Answer
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On February 16,Hawthorne Co.declares a $1.36 dividend to be paid on April 5.There are 1,900,000 shares of common stock issued and outstanding.The entry recorded by the company on April 5 includes a debit to:

Correct Answer
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Advantages of equity financing over debt financing include that:

Correct Answer
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The number of shares issued represents the number of shares:

Correct Answer
verified

Nova,Inc.is considering declaring a $100,000 cash dividend.Nova has a cash balance of $20,000 and Retained Earnings balance of $100,000.Nova should:

Correct Answer
verified

When a company reissues (or sells)shares of its treasury stock at an amount different than its cost,it reports a gain or a loss on the sale.

Correct Answer
verified

Correct Answer
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Which of the following statements about dividends is correct?

Correct Answer
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Which of the following statements about stock dividends is correct?

Correct Answer
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Cholla Co.issued 20,000 shares of no-par value common stock at $10 per share.Mr.Ivanhoe,the bookkeeper,recorded the transaction with a $200,000 debit to Cash and $200,000 credit to Common Stock.Which of the following statements about this situation is correct?

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

Correct Answer
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In an IPO on May 1,2012,Timmy Hilfigure purchased 1,000 shares of Abner Crummie,Inc.for $5,000.On April 30,2018,Timmy Hilfigure sold the 1,000 shares for $8,000 to Ralph Loring.What is the effect of the sale on April 30,2018?

Correct Answer
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Before dividends can be paid to common stockholders,if the preferred stock is ,any must be paid to the preferred stockholders.

Correct Answer
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Match each term with the appropriate definition.Not all definitions will be used. -Market Value

Correct Answer
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Exam 11: Stockholders Equity

Gladstone Company issues 200,000 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

A corporation had 50,000 shares of $20 par value common stock outstanding.The board of directors declared and issued a 50% stock dividend.The market value of the stock was $27 per share.What is the journal entry to record this stock dividend?

Correct AnswerverifiedShow Answer

Which of the following organizations is required by law to apply for a charter?

Correct AnswerverifiedShow Answer

Dividends in arrears are reported as current liabilities on the balance sheet.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match each term with the appropriate definition.Not all definitions will be used. -LLC

Correct AnswerverifiedShow Answer

If a corporation declares and distributes a stock dividend on its common shares:

Correct AnswerverifiedShow Answer

On February 16,Hawthorne Co.declares a $1.36 dividend to be paid on April 5.There are 1,900,000 shares of common stock issued and outstanding.The entry recorded by the company on April 5 includes a debit to:

Correct AnswerverifiedShow Answer

Advantages of equity financing over debt financing include that:

Correct AnswerverifiedShow Answer

The number of shares issued represents the number of shares:

Correct AnswerverifiedShow Answer

Nova,Inc.is considering declaring a $100,000 cash dividend.Nova has a cash balance of $20,000 and Retained Earnings balance of $100,000.Nova should:

Correct AnswerverifiedShow Answer

When a company reissues (or sells)shares of its treasury stock at an amount different than its cost,it reports a gain or a loss on the sale.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements about dividends is correct?

Correct AnswerverifiedShow Answer

Which of the following statements about stock dividends is correct?

Correct AnswerverifiedShow Answer

Cholla Co.issued 20,000 shares of no-par value common stock at $10 per share.Mr.Ivanhoe,the bookkeeper,recorded the transaction with a $200,000 debit to Cash and $200,000 credit to Common Stock.Which of the following statements about this situation is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In an IPO on May 1,2012,Timmy Hilfigure purchased 1,000 shares of Abner Crummie,Inc.for $5,000.On April 30,2018,Timmy Hilfigure sold the 1,000 shares for $8,000 to Ralph Loring.What is the effect of the sale on April 30,2018?

Correct AnswerverifiedShow Answer

Before dividends can be paid to common stockholders,if the preferred stock is ________,any ________ must be paid to the preferred stockholders.

Correct AnswerverifiedShow Answer

Match each term with the appropriate definition.Not all definitions will be used. -Market Value

Correct AnswerverifiedShow Answer

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Before dividends can be paid to common stockholders,if the preferred stock is ,any must be paid to the preferred stockholders.

Correct Answer
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