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Accounting
Q:
The statement of changes in stockholders' equity:
A. Is part of the statement of retained earnings.
B. Shows only the ending balances in stockholders' equity.
C. Describes changes in contributed capital and retained earnings subcategories
D. Does not include changes in treasury stock.
E. Is reported by very few companies.
Q:
A company had a beginning balance in retained earnings of $43,000. It had net income of $6,000 and paid out cash dividends of $5,625 in the current period. The ending balance in retained earnings account is equal to:
A. $108,625
B. $(12,625)
C. $11,375
D. $43,375
E. $(11,375)
Q:
Changes in accounting estimates are:
A. Considered accounting errors.
B. Reported as prior period adjustments.
C. Accounted for with a cumulative "catch-up" adjustment.
D. Extraordinary items.
E. Accounted for in current and future periods.
Q:
Prior period adjustments are reported in the:
A. Income statement.
B. Balance sheet.
C. Statement of retained earnings.
D. Statement of cash flows.
E. Notes to the financial statements.
Q:
Prior period adjustments to financial statements can result from:
A. Changes in estimates.
B. Using unacceptable accounting principles.
C. Discontinued operations.
D. Changes in tax law.
E. Extraordinary items.
Q:
A company issued 7% preferred stock with a $100 par value. This means that:
A. Preferred shareholders have a guaranteed dividend.
B. The amount of the potential dividend is $7 per year per preferred share.
C. Preferred shareholders are entitled to 7% of the annual income.
D. The market price per share will approximate $100 per share.
E. Only 7% of the total contributed capital can be preferred stock.
Q:
A dividend preference for preferred stock means that:
A. Preferred stockholders receive their dividends before common shareholders.
B. Preferred shareholders are guaranteed dividends.
C. Dividends are paid quarterly.
D. Preferred stockholders prefer dividends more than common stockholders.
E. Dividends must be declared on preferred stock.
Q:
Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:
A. Participating preferred stock
B. Callable preferred stock
C. Cumulative preferred stock
D. Convertible preferred stock
E. Noncumulative preferred stock
Q:
Owners of preferred stock often do not have:
A. Ownership rights to assets of the corporation.
B. Voting rights.
C. Preference to dividends.
D. The right to sell their stock on the open market.
E. Preference to assets at liquidation.
Q:
A corporation's minimum legal capital is often defined to be the total par value of the shares:
A. Issued
B. Authorized
C. Subscribed
D. Outstanding
E. In treasury
Q:
Stockholders' equity consists of:
A. Long-term assets.
B. Contributed capital and retained earnings.
C. Contributed capital and par value.
D. Retained earnings and cash.
E. Premiums and discounts.
Q:
Stated value of no-par stock is:
A. Another name for redemption value.
B. An amount assigned to par value stock by the state of incorporation.
C. The market value of the stock on the date of issuance.
D. The difference between the par value of stock and the amount below or above par value contributed by the stockholder.
E. An amount assigned to no-par stock by the corporation's board of directors.
Q:
The total amount of cash and other assets received by a corporation from its stockholders in exchange for common stock is:
A. Always equal to its par value.
B. Always equal to its stated value.
C. Referred to as contributed capital.
D. Referred to as retained earnings.
E. Always below its stated value.
Q:
An amount of assets defined by state law that stockholders must invest and leave invested in a corporation is called the:
A. Par value of preferred.
B. Minimum legal capital.
C. Premium capital.
D. Stated value.
E. Working capital.
Q:
When all of the authorized shares have the same rights and characteristics, the stock is called:
A. Preferred stock
B. Common stock
C. Par value stock
D. Stated value stock
E. No-par value stock
Q:
Par value of a stock refers to the:
A. Issue price of the stock.
B. Value assigned to a share of stock by the corporate charter.
C. Market value of the stock on the date of the financial statements.
D. Maximum selling price of the stock.
E. Dividend value of the stock.
Q:
The total amount of stock that a corporation's charter allows it to issue is referred to as:
A. Issued stock
B. Outstanding stock
C. Common stock
D. Preferred stock
E. Authorized stock
Q:
A proxy is:
A. A legal document that gives a designated agent of a stockholder the power to vote the stock.
B. A contractual commitment by an investor to purchase unissued shares of stock.
C. An amount of assets defined by state law that stockholders must invest and leave invested in a corporation.
D. The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation.
E. An arbitrary amount assigned to no-par stock by the corporation's board of directors.
Q:
The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:
A. Preemptive right
B. Proxy right
C. Right to call
D. Financial leverage
E. Voting right
Q:
The costs of bringing a corporation into existence, including legal fees, promoter fees, and amounts paid to obtain a charter, are called:
A. Minimum legal capital
B. Stock subscriptions
C. Organization costs
D. Cumulative costs
E. Prepaid fees
Q:
When a company declares cash dividends, retained earnings is reduced.
Q:
A debit balance in retained earnings is often referred to as a retained earnings deficit.
Q:
Dividend yield is defined as the market price per share of a company's stock divided by its earnings per share.
Q:
The price-earnings ratio reveals information about the stock market's expectations for a company's future growth in earnings, dividends, and economic opportunities.
Q:
Earnings per share is calculated by dividing the total number of common shares outstanding by net income.
Q:
Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average) common stock.
Q:
Changes in accounting estimates are accounted for in current and future periods.
Q:
Common stock always carries a preference for receiving dividends over preferred stock.
Q:
A corporation can issue both common and preferred stock.
Q:
Minimum legal capital requirements often prohibit dividends when the dividends reduce stockholders' equity below the minimum specified amount.
Q:
Authorized stock is the total number of shares outstanding.
Q:
A corporation is a separate legal entity from its owners.
Q:
_________________ is a corporation's own stock that has been reacquired.
Q:
_____________________ preferred stock gives the issuing corporation the right to purchase or retire the stock from its holders at specified future prices and dates.
Q:
____________________ preferred stock gives holders the option to exchange their preferred shares for common shares at a specified rate.
Q:
_____________________ preferred stock has a feature that allows preferred stockholders to share with common stockholders in any dividends paid in excess of the percent or dollar amount stated on the preferred stock.
Q:
When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends, the unpaid amount is called ____________________________.
Q:
Holders of ______________________________ have a right to be paid both current and all prior periods' unpaid dividends before any dividend is paid to common shareholders.
Q:
A stock dividend is never a ________________ on the balance sheet because it will never reduce _______________.
Q:
The journal entry to record distribution of a cash dividend to common shareholders includes a debit to _______________________ and a credit to __________.
Q:
Dividend payment involves three important dates. They are ______________________, _________________________ and ____________________________.
Q:
The account used to record a premium on issued stock is titled ______________________________________________.
Q:
______________________________________ is the stockholders' equity applicable to common shares divided by the number of common shares outstanding.
Q:
__________________________ is the annual amount of cash dividends distributed to common shareholders relative to the stock's market price.
Q:
The price-earnings (PE) ratio is calculated by dividing ___________________________ by ________________________________.
Q:
_____________ is the amount of income earned per share of a company's outstanding common stock.
Q:
If a company discovers a mistake in 2013 that was made in 2012, the company records the adjustment in the year ________.
Q:
___________________________ are corrections of material errors in prior period financial statements.
Q:
_______________________ generally consist of a company's cumulative net income less any net losses and dividends declared since its inception.
Q:
_________________________ has special rights that give it priority or senior status over common stock in one or more areas such as receiving dividends or for the distribution of assets if the corporation is liquidated.
Q:
The least amount that the buyers of stock must contribute to the corporation or be subject to paying at a future date is called ____________________________.
Q:
_______________________________ is the total amount of cash and other assets received by the corporation from its stockholders in exchange for common stock.
Q:
The total amount of cash and other assets the corporation receives from its stockholders in exchange for common stock is called __________________________.
Q:
No-par stock to which the directors assign a value per share is called _______________________.
Q:
Stock that is not assigned a value per share by the corporate charter is called __________________.
Q:
_____________________ is a class of stock assigned a value by the corporation in its charter.
Q:
_____________________ is the amount at which a stock is bought and sold.
Q:
_____________________ is a general term that refers to any shares issued to obtain owner financing in a corporation.
Q:
________________________ is the number of shares that a corporation's charter allows it to sell.
Q:
The _______________________ protects stockholders' proportional interest in a corporation by allowing them to purchase their proportional share of any common stock later issued by the corporation.
Q:
A corporation is responsible for its own acts and debts as the corporation is considered a ____________________________________.
Q:
_______________________ are responsible for and have final authority for managing a corporation's activities.
Q:
On August 31, 2013, Gilliam Corporation's common stock is priced at $50 per share before any stock dividend, and the stockholders' equity section of its balance sheet appears as follows. Assume that the company declares and immediately distributes a 10% stock dividend. Common stock$7 par value, 95,000 shares authorized, 44,000 shares issued and outstanding
$ 308,000 Paid-in capital in excess of par value, common stock
100,000 Retained earnings
375,000 Total stockholders' equity
$783,000 What is the total amount in the Retained Earning account immediately after the stock dividend?
Q:
On August 31, 2013, Gilliam Corporation's common stock is priced at $50 per share before any stock dividend, and the stockholders' equity section of its balance sheet appears as follows. Assume that the company declares and immediately distributes a 35% stock dividend. Common stock$7 par value, 95,000 shares authorized, 44,000 shares issued and outstanding
$ 308,000 Paid-in capital in excess of par value, common stock
100,000 Retained earnings
375,000 Total stockholders' equity
$783,000 What is the total amount in the Retained Earnings account immediately after the stock dividend?
Q:
A company sold stock for $733,000. The shares had a par value of $6.26 each. After the transaction, the paid-in capital in excess of par common stock account had a balance of $420,000. How many shares did the company sell?
Q:
A companys outstanding stock consists of (a) 67,000 shares of cumulative 5% preferred stock with a $20 par value and (b) 95,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends: 2013 $ 0 2014 50,000 2015 180,000 2016 205,000 What is the amount of dividends that the common stockholders receive for all years presented?
Q:
Record the following transactions of a company in general journal form:
(a) Reacquired 8,000 of its own $10 par value common stock at $40 cash per share. The stock was originally issued at $15 per share.
(b) Sold 2,000 shares of the stock reacquired under part (a) at $43 cash per share.
(c) Sold 3,000 shares of the stock reacquired under part (a) at $39 cash per share.
Q:
On January 10, a corporation purchased 5,000 shares of its own common stock at $17.50 per share. On August 4, a total of 1,000 treasury shares were sold at $19.00 per share. These are the only treasury stock transactions ever made by the corporation. Prepare the journal entries required on January 10 and August 4.
Q:
A company's only treasury stock transactions for the current year are as follows: (1) 1,000 shares of its common stock were purchased on June 1 for $40,000; (2) On July 1 it reissued 500 of these shares at $45 per share; (3) On August 1 it reissued the 500 remaining treasury shares at $38 per share.
(1) Prepare the journal entries required to record these transactions.
(2) Calculate the balance in Paid-in Capital, Treasury Stock, on September 1 assuming its beginning-year balance is zero.
Q:
A company reported the following stockholders' equity on January 1 of the current year: Common stock, $10 par, 1,000,000 shares authorized, 400,000 shares issued
$4,000,000 Paid-in capital in excess of par, common
1,200,000 Retained earnings
1,600,000 Total stockholders equity
$6,800,000 Prepare journal entries for the following selected transactions related to this company's stock during the current year: Mar. 1
Purchased 10,000 shares of treasury stock for $17 per share. May 5
Sold 4,000 shares of treasury stock for $16 per share. Oct. 12
Sold 2,000 shares of treasury stock for $18 per share.
Q:
A company was organized in January 2012 and has 2,000 shares of $100 par value, 10%, nonparticipating preferred stock outstanding and 30,000 shares of $10 par value common stock outstanding. It has declared and paid cash dividends each year as shown below. Calculate the total dividends distributed to each class of stockholder under each of the assumptions given. Assuming Preferred Stock Is Not Cumulative
Assuming Preferred Stock Is Cumulative Year
Cash Dividends Declared and Paid
Preferred Dividend
Common Dividend
Preferred Dividend
Common Dividend 2012
$15,000 2013
$36,000 2014
$60,000
Q:
A company has $100,000 of 10% noncumulative, nonparticipating, preferred stock outstanding and $150,000 of common stock outstanding. In the company's first year of operation, it paid no dividends, but during the second year, it paid cash dividends of $25,000. Compute the dividends to be distributed to (1) preferred shares and (2) common shares.
Q:
A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend during the current year: Preferred stock, $100 par, 6%, 5,000 shares issued
$ 500,000 Common stock, $10 par, 75,000 shares issued
750,000 Total
$1,250,000 Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.
Q:
A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend in the current year: Preferred stock, $100 par, 6%, 5,000 shares issued
$ 500,000 Common stock, $10 par, 70,000 shares issued
700,000 Total
$1,200,000 Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.
Q:
A company had the following stockholders' equity on January 1: Common stock $1 par value; 1,200,000 shares authorized, 400,000 shares issued and outstanding
$ 400,000 Contributed capital in excess of par value, common stock
300,000 Retained earnings
364,000 Total stockholders equity
$1,064,000 On January 10, the company declared a 40% stock dividend to holders of record on January 25, to be distributed January 31. The market value of the stock on January 10 prior to the dividend was $20 per share. What is the book value per common share on February 1?
Q:
On July 31, a corporation reported the following stockholders' equity: Common stock, $10 par value, 200,000 shares authorized, 100,000 shares issued and outstanding
$1,000,000 Retained earnings
350,000 Total stockholders equity
$1,350,000 On July 31, the market value of the corporation's stock was $15 per share. The directors were considering declaring a 10% or 30% stock dividend but wanted to know what effect each stock dividend would have on stockholders' equity. Calculate the balances in the following accounts for each proposed stock dividend distribution. Balances after Balances after 10% Stock Dividend 30% Stock Dividend Common stock.........................
_____________ _____________ Contributed capital in excess of par value, Common stock.........................
_____________ _____________ Retained earnings.........................
_____________ _____________ Total stockholders equity
______________ _____________
Q:
A corporation had stockholders' equity on January 1 as follows: common stock, $5 par value, 1,000,000 shares authorized, 500,000 shares issued; contributed capital in excess of par value, common stock, $1,000,000; retained earnings, $3,000,000. Prepare journal entries to record the following transactions: Feb. 15
The board of directors declared a 5% stock dividend to stockholders of record on March 1, to be issued on March 20. The stock was trading at $6 per share prior to the dividend. Mar. 1
The date of record. Mar. 20
Issued the stock dividend.
Q:
On May 1, a company's board of directors declared a 10% stock dividend to be distributed on June 1 to the stockholders of record on May 21. The company had 250,000 shares of $10 par value common stock outstanding with a market value of $22 per share. Prepare the journal entries required on May 1, May 21, and June 1.
Q:
A corporation has 200,000 shares of $10 par value common stock outstanding. The following selected transactions related to the company's stock took place during the current year: Apr. 15
Declared a 40% stock dividend to stockholders of record on May 1, to be issued May 10. The current market valued is $15 per common share. May 1
Date of record. May 10
Issued the common stock dividend. Prepare the journal entries to record these transactions.
Q:
For each of the following independent transactions (a) through (d), prepare the necessary journal entry:
(a) Declared a $0.40 per share cash dividend on 200,000 shares of preferred stock outstanding.
(b) Declared and distributed a 12% stock dividend on 800,000 shares of $5 par value common stock outstanding. Market price per common share on this date was $25.
(c) Declared and distributed a 2-for-1 stock split on 500,000 shares of $10 par value common stock outstanding.
(d) Declared and distributed a 30% stock dividend on 400,000 common shares of $5 par value common stock outstanding. Market price per common share on this date was $20.