Question 1

Which of the following occurs when a stockholder invests cash in a corporation in exchange for stock?

Accepted Answer

A)  both liabilities and stockholders' equity are increased
B)  both assets and stockholders' equity are increased
C)  one asset is increased and another asset is decreased
D)  both assets and liabilities are increasedE) A) and B)
F) A) and C)

Question 2

A higher price/earnings ratio signifies a higher return on investment.

Accepted Answer

A) True 
 B)False

Question 3

On December 2,2014,Ewell Inc.purchases a piece of land from the original owner.In exchange for the land,Ewell Inc.issues 8,000 shares of common stock with $1.00 par value.The land has been appraised at a market value of $400,000.Provide the journal entry for this transaction.

Accepted Answer

The answer of On December 2,2014,Ewell Inc.purchases a piece of...

Question 4

Which of the following occurs when a previously declared dividend is paid?

Accepted Answer

A)  assets increase
B)  stockholders' equity increases
C)  liabilities decrease
D)  assets remain unchangedE) B) and C)
F) All of the above

Question 5

The retained earnings of a corporation is the ________.

Accepted Answer

A)  internally generated capital that is raised from profitable operations
B)  externally generated capital that is contributed by shareholders
C)  externally generated capital that is raised from banks and other creditors
D)  internally generated capital that from the direct investment of employeesE) B) and C)
F) None of the above

Question 6

A 3-for-1 stock split of a $3 par value share will result in three shares of $1 par value.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following will happen to a stockholder's percentage ownership in the stock of a corporation when the corporation declares a stock dividend?

Accepted Answer

A)  The stockholder's percentage ownership decreases.
B)  The stockholder's percentage ownership can increase or decrease.
C)  The stockholder's percentage ownership increases.
D)  The stockholder's percentage ownership remains unchanged.E) A) and B)
F) A) and C)

Question 8

The following information is from the balance sheet of Jackson Corporation as of December 31,2015.
  What is the average issue price of the preferred stock shares?

Accepted Answer

A)  $107
B)  $100
C)  $176
D)  $105E) B) and C)
F) None of the above

Question 9

Maywood Inc.has 2,000 shares of common stock outstanding.A stockholder has 100 shares.If the company distributes a 20% stock dividend,how many shares of Maywood will the stockholder have?

Accepted Answer

A)  120 shares
B)  400 shares
C)  100 shares
D)  20 sharesE) A) and C)
F) C) and D)

Question 10

On the date of record of dividends,the company ________.

Accepted Answer

A)  issues new shares of stock on that date
B)  disburses dividend payments to stockholders on that date
C)  records the dividend payable amount on that date
D)  determines who owns the shares of stock on that dateE) None of the above
F) B) and D)

Question 11

A net loss for the year decreases the balance in Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following corporate characteristics is a disadvantage of a corporation?

Accepted Answer

A)  Stockholders of a corporation have limited liability.
B)  A corporation has a continuous life.
C)  There is no mutual agency among the stockholders and the corporation.
D)  Earnings of a corporation are taxed twice.E) None of the above
F) A) and B)

Question 13

When a company has issued both preferred and common stock,the common stockholders are allocated their dividends first.

Accepted Answer

A) True 
 B)False

Question 14

Ropers Inc.purchases 7,000 shares of its own $2 par value common stock for $160 per share.Which of the following is the correct journal entry to record this transaction?

Accepted Answer

A)  debit Common Stock-$2 Par Value $2,240,000 and credit Cash $2,240,000
B)  debit Cash $2,240,000 and credit Paid-In Capital in Excess of Par-Common $2,240,000
C)  debit Cash $2,240,000 and credit Treasury Stock-Common $2,240,000
D)  debit Treasury Stock-Common $1,120,000 and credit Cash $1,120,000E) A) and B)
F) All of the above

Question 15

Orleans Inc.was incorporated on January 1,2012.Orleans issued 4,000 shares of common stock and 500 shares of preferred stock on that date.The preferred stock is cumulative,$100 par,with an 8% dividend rate.Orleans has not paid any dividends yet.In 2015,Orleans had its first profitable year,and on November 1,2015,Orleans declared a total dividend of $28,000.What is the total amount that will be paid out to preferred shareholders?

Accepted Answer

A)  $4,000
B)  $16,000
C)  $3,200
D)  $28,000E) B) and C)
F) None of the above

Question 16

Outstanding stock refers to the ________.

Accepted Answer

A)  shares of stock that are held by the stockholders
B)  shares of stock that are sold for the highest price
C)  total amount of stock that has been authorized by state law
D)  total amount of stock that has not been sold yetE) None of the above
F) C) and D)

Question 17

Which of the following actions could increase the balance in the Paid-In Capital in Excess of Par-Common Account?

Accepted Answer

A)  cash dividend declared
B)  stock split
C)  10% stock dividend declared
D)  purchase of treasury stockE) C) and D)
F) A) and D)

Question 18

Landess Corporation currently has 120,000 shares outstanding of $1 par value common stock.The stock was originally issued for $12 per share.On March 15,the board of directors declares a 10% stock dividend when the stock is selling for $16 per share.Which of the following is the correct journal entry to record this transaction?

Accepted Answer

A)  debit Common Stock Dividend Distributable $12,000,debit Paid-In Capital in Excess of Par-Common for $180,000 and credit Retained Earnings $192,000
B)  debit Retained Earnings $192,000 and credit Common Stock Dividend Distributable $192,000
C)  debit Retained Earnings $192,000,credit Common Stock Dividend Distributable $12,000 and credit Paid-In Capital in Excess of Par-Common $180,000
D)  debit Paid-In Capital in Excess of Par-Common $192,000 and credit Retained Earnings $192,000E) C) and D)
F) A) and B)

Question 19

Gordon Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $11.50 per share.  What would be the total stockholders' equity after a 10% common stock dividend?

Accepted Answer

A)  $656,000
B)  $320,000
C)  $610,000
D)  $366,000E) B) and D)
F) A) and B)

Question 20

Stock dividends are distributed to stockholders in proportion to the number of shares each stockholder already owns.

Accepted Answer

A) True 
 B)False

Exam 13: Stockholders Equity

Which of the following occurs when a previously declared dividend is paid?

Correct Answer
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On the date of record of dividends,the company ________.

Correct Answer
verified

Which of the following actions could increase the balance in the Paid-In Capital in Excess of Par-Common Account?

Correct Answer
verified

Maywood Inc.has 2,000 shares of common stock outstanding.A stockholder has 100 shares.If the company distributes a 20% stock dividend,how many shares of Maywood will the stockholder have?

Correct Answer
verified

Which of the following corporate characteristics is a disadvantage of a corporation?

Correct Answer
verified

Stock dividends are distributed to stockholders in proportion to the number of shares each stockholder already owns.

Correct Answer
verified

The retained earnings of a corporation is the ________.

Correct Answer
verified

A net loss for the year decreases the balance in Retained Earnings.

Correct Answer
verified

Gordon Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $11.50 per share. What would be the total stockholders' equity after a 10% common stock dividend?

Correct Answer
verified

Which of the following occurs when a stockholder invests cash in a corporation in exchange for stock?

Correct Answer
verified

Outstanding stock refers to the ________.

Correct Answer
verified

Correct Answer
verified

A 3-for-1 stock split of a $3 par value share will result in three shares of $1 par value.

Correct Answer
verified

When a company has issued both preferred and common stock,the common stockholders are allocated their dividends first.

Correct Answer
verified

Ropers Inc.purchases 7,000 shares of its own $2 par value common stock for $160 per share.Which of the following is the correct journal entry to record this transaction?

Correct Answer
verified

Correct Answer
verified

On December 2,2014,Ewell Inc.purchases a piece of land from the original owner.In exchange for the land,Ewell Inc.issues 8,000 shares of common stock with $1.00 par value.The land has been appraised at a market value of $400,000.Provide the journal entry for this transaction.

Correct Answer
verified

The following information is from the balance sheet of Jackson Corporation as of December 31,2015. What is the average issue price of the preferred stock shares?

Correct Answer
verified

A higher price/earnings ratio signifies a higher return on investment.

Correct Answer
verified

Which of the following will happen to a stockholder's percentage ownership in the stock of a corporation when the corporation declares a stock dividend?

Correct Answer
verified

Exam 13: Stockholders Equity

Which of the following occurs when a previously declared dividend is paid?

Correct AnswerverifiedShow Answer

On the date of record of dividends,the company ________.

Correct AnswerverifiedShow Answer

Which of the following actions could increase the balance in the Paid-In Capital in Excess of Par-Common Account?

Correct AnswerverifiedShow Answer

Maywood Inc.has 2,000 shares of common stock outstanding.A stockholder has 100 shares.If the company distributes a 20% stock dividend,how many shares of Maywood will the stockholder have?

Correct AnswerverifiedShow Answer

Which of the following corporate characteristics is a disadvantage of a corporation?

Correct AnswerverifiedShow Answer

Stock dividends are distributed to stockholders in proportion to the number of shares each stockholder already owns.

Correct AnswerverifiedShow Answer

The retained earnings of a corporation is the ________.

Correct AnswerverifiedShow Answer

A net loss for the year decreases the balance in Retained Earnings.

Correct AnswerverifiedShow Answer

Gordon Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $11.50 per share. What would be the total stockholders' equity after a 10% common stock dividend?

Correct AnswerverifiedShow Answer

Which of the following occurs when a stockholder invests cash in a corporation in exchange for stock?

Correct AnswerverifiedShow Answer

Outstanding stock refers to the ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A 3-for-1 stock split of a $3 par value share will result in three shares of $1 par value.

Correct AnswerverifiedShow Answer

When a company has issued both preferred and common stock,the common stockholders are allocated their dividends first.

Correct AnswerverifiedShow Answer

Ropers Inc.purchases 7,000 shares of its own $2 par value common stock for $160 per share.Which of the following is the correct journal entry to record this transaction?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

On December 2,2014,Ewell Inc.purchases a piece of land from the original owner.In exchange for the land,Ewell Inc.issues 8,000 shares of common stock with $1.00 par value.The land has been appraised at a market value of $400,000.Provide the journal entry for this transaction.

Correct AnswerverifiedShow Answer

The following information is from the balance sheet of Jackson Corporation as of December 31,2015. What is the average issue price of the preferred stock shares?

Correct AnswerverifiedShow Answer

A higher price/earnings ratio signifies a higher return on investment.

Correct AnswerverifiedShow Answer

Which of the following will happen to a stockholder's percentage ownership in the stock of a corporation when the corporation declares a stock dividend?

Correct AnswerverifiedShow Answer

Correct Answer
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