Question 1

The entry to record the distribution of a stock dividend includes a:

Accepted Answer

A)  credit to Common Stock and a debit to Retained Earnings.
B)  debit to Retained Earnings and a credit to Stock Dividends Payable.
C)  debit to Stock Dividends Payable and a credit to Stock Dividends.
D)  debit to Stock Dividends Payable and a credit to Retained Earnings.E) C) and D)
F) A) and D)

Question 2

Legal capital is an arbitrary amount assigned by a company to a share of stock.

Accepted Answer

A) True 
 B)False

Question 3

A primary reason a company "goes public" is to raise money for business expansion purposes.

Accepted Answer

A) True 
 B)False

Question 4

GAAP identifies stock dividends below 25% as small and suggests the dividend can be recorded at the market value of shares distributed.

Accepted Answer

A) True 
 B)False

Question 5

Shareholder rights may include:

Accepted Answer

A)  right to proportionate share of assets in the event of a liquidation.
B)  right to vote for managers of the corporation.
C)  right to an equal share of dividends.
D)  all of the above.E) A) and B)
F) B) and D)

Question 6

A company issues one hundred shares of no- par common stock with a $10 stated value for $17 per share. The entry to record this issuance includes a:

Accepted Answer

A)  credit to Common Stock for $1,700.
B)  debit to Paid- in Capital in Excess of Stated Value-Common for $1,000.
C)  credit to Common Stock for $700.
D)  credit to Paid- in Capital in Excess of Stated Value-Common for $700.E) All of the above
F) A) and B)

Question 7

Contributed capital is also known as:

Accepted Answer

A)  paid- in capital.
B)  common stockholders' equity.
C)  total stockholders' equity.
D)  retained earnings.E) None of the above
F) A) and C)

Question 8

Assets received in exchange for the issuance of stock should be recorded at:

Accepted Answer

A)  historical cost less accumulated depreciation taken to date.
B)  historical cost.
C)  book value of the asset exchanged.
D)  fair market value, as determined by a good- faith estimate from independent appraisers.E) B) and D)
F) B) and C)

Question 9

Double taxation means that corporate earnings are taxed at the corporate level and a second time when distributed to the shareholders as dividends

Accepted Answer

A) True 
 B)False

Question 10

The price the corporation agrees to pay to repurchase its preferred stock, which is set when the stock is issued, is called the:

Accepted Answer

A)  fair market value.
B)  callable value.
C)  redemption value.
D)  book value.E) A) and B)
F) C) and D)

Question 11

When 100 shares of $10 par value Common Stock are sold at $53 per share, Paid- in Capital in Excess of Par value-Common will:

Accepted Answer

A)  increase $4,300.
B)  increase $1,000.
C)  increase $5,300.
D)  not be affected.E) C) and D)
F) A) and D)

Question 12

The book value of a stock is the amount of stockholders' equity on the company's books for each share of stock.

Accepted Answer

A) True 
 B)False

Question 13

The price that the stockholder pays to acquire stock from the corporation is the:

Accepted Answer

A)  authorized price.
B)  stated price.
C)  par price.
D)  issue price.E) A) and B)
F) All of the above

Question 14

In a corporation, the two basic sources of stockholders' equity are:

Accepted Answer

A)  par value and no- par value stock.
B)  paid- in capital and retained earnings.
C)  preferred stock and common stock.
D)  donated capital and contributed capital.E) B) and D)
F) B) and C)

Question 15

Wallendo Corporation issued 5,000 shares of its $1 par value common stock as a stock dividend when the shares were selling for $10 per share. At the time of the dividend, Wallendo had 100,000 shares of common stock outstanding. These shares were originally issued for $5 per share. The entry to record the stock dividend includes a debit to Retained Earnings for:

Accepted Answer

A)  $50,000.
B)  $105,000.
C)  $5,000.
D)  $100,000.E) A) and D)
F) All of the above

Question 16

The B. Spaniel Company has Common Stock with a $5 par value. 100,000 shares were authorized and 25,000 shares were issued. Common stock is currently selling at $13 per share. The entry to record the distribution of a 15% common stock dividend includes a:

Accepted Answer

A)  credit to Paid- in Capital in Excess of Par Value-Common for $30,000.
B)  debit to Retained Earnings for $37,500.
C)  debit to Paid- in Capital in Excess of Par Value-Common for $30,000.
D)  credit to Common Stock for $37,400.E) A) and B)
F) A) and C)

Question 17

A company "goes public" when its owners become shareholders.

Accepted Answer

A) True 
 B)False

Question 18

Hillerbert Company declared a 2- for- 1 stock split on its 200,000 shares of $10 par value common stock. As a result of this transaction:

Accepted Answer

A)  Paid- in Capital increases by $2,000.
B)  both A and B are correct.
C)  Common Stock increases to $4,000,000.
D)  none of these answers is correct.E) A) and D)
F) A) and C)

Question 19

When the board of directors declares a cash dividend, the owners of noncumulative preferred stock must receive:

Accepted Answer

A)  all dividends in arrears plus the current year's dividend.
B)  the current year's dividend, but no dividends in arrears.
C)  dividends in arrears, but not the current year's dividend.
D)  neither the current year's dividend nor dividends in arrears.E) A) and D)
F) B) and C)

Question 20

A Gain on Issue of Common Stock indicates that the stock was sold for more than its par value.

Accepted Answer

A) True 
 B)False

Exam 9: Stockholders Equity

The entry to record the distribution of a stock dividend includes a:

Correct Answer
verified

A Gain on Issue of Common Stock indicates that the stock was sold for more than its par value.

Correct Answer
verified

The price that the stockholder pays to acquire stock from the corporation is the:

Correct Answer
verified

Correct Answer
verified

Assets received in exchange for the issuance of stock should be recorded at:

Correct Answer
verified

In a corporation, the two basic sources of stockholders' equity are:

Correct Answer
verified

A company issues one hundred shares of no- par common stock with a $10 stated value for $17 per share. The entry to record this issuance includes a:

Correct Answer
verified

The B. Spaniel Company has Common Stock with a $5 par value. 100,000 shares were authorized and 25,000 shares were issued. Common stock is currently selling at $13 per share. The entry to record the distribution of a 15% common stock dividend includes a:

Correct Answer
verified

Contributed capital is also known as:

Correct Answer
verified

Double taxation means that corporate earnings are taxed at the corporate level and a second time when distributed to the shareholders as dividends

Correct Answer
verified

Hillerbert Company declared a 2- for- 1 stock split on its 200,000 shares of $10 par value common stock. As a result of this transaction:

Correct Answer
verified

GAAP identifies stock dividends below 25% as small and suggests the dividend can be recorded at the market value of shares distributed.

Correct Answer
verified

The price the corporation agrees to pay to repurchase its preferred stock, which is set when the stock is issued, is called the:

Correct Answer
verified

A primary reason a company "goes public" is to raise money for business expansion purposes.

Correct Answer
verified

A company "goes public" when its owners become shareholders.

Correct Answer
verified

When 100 shares of $10 par value Common Stock are sold at $53 per share, Paid- in Capital in Excess of Par value-Common will:

Correct Answer
verified

When the board of directors declares a cash dividend, the owners of noncumulative preferred stock must receive:

Correct Answer
verified

Shareholder rights may include:

Correct Answer
verified

The book value of a stock is the amount of stockholders' equity on the company's books for each share of stock.

Correct Answer
verified

Legal capital is an arbitrary amount assigned by a company to a share of stock.

Correct Answer
verified

Exam 9: Stockholders Equity

The entry to record the distribution of a stock dividend includes a:

Correct AnswerverifiedShow Answer

A Gain on Issue of Common Stock indicates that the stock was sold for more than its par value.

Correct AnswerverifiedShow Answer

The price that the stockholder pays to acquire stock from the corporation is the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assets received in exchange for the issuance of stock should be recorded at:

Correct AnswerverifiedShow Answer

In a corporation, the two basic sources of stockholders' equity are:

Correct AnswerverifiedShow Answer

A company issues one hundred shares of no- par common stock with a $10 stated value for $17 per share. The entry to record this issuance includes a:

Correct AnswerverifiedShow Answer

The B. Spaniel Company has Common Stock with a $5 par value. 100,000 shares were authorized and 25,000 shares were issued. Common stock is currently selling at $13 per share. The entry to record the distribution of a 15% common stock dividend includes a:

Correct AnswerverifiedShow Answer

Contributed capital is also known as:

Correct AnswerverifiedShow Answer

Double taxation means that corporate earnings are taxed at the corporate level and a second time when distributed to the shareholders as dividends

Correct AnswerverifiedShow Answer

Hillerbert Company declared a 2- for- 1 stock split on its 200,000 shares of $10 par value common stock. As a result of this transaction:

Correct AnswerverifiedShow Answer

GAAP identifies stock dividends below 25% as small and suggests the dividend can be recorded at the market value of shares distributed.

Correct AnswerverifiedShow Answer

The price the corporation agrees to pay to repurchase its preferred stock, which is set when the stock is issued, is called the:

Correct AnswerverifiedShow Answer

A primary reason a company "goes public" is to raise money for business expansion purposes.

Correct AnswerverifiedShow Answer

A company "goes public" when its owners become shareholders.

Correct AnswerverifiedShow Answer

When 100 shares of $10 par value Common Stock are sold at $53 per share, Paid- in Capital in Excess of Par value-Common will:

Correct AnswerverifiedShow Answer

When the board of directors declares a cash dividend, the owners of noncumulative preferred stock must receive:

Correct AnswerverifiedShow Answer

Shareholder rights may include:

Correct AnswerverifiedShow Answer

The book value of a stock is the amount of stockholders' equity on the company's books for each share of stock.

Correct AnswerverifiedShow Answer

Legal capital is an arbitrary amount assigned by a company to a share of stock.

Correct AnswerverifiedShow Answer

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