Question 1

A stock split is similar to a stock dividend in that it results in additional shares of stock outstanding and is nontaxable.

Accepted Answer

A) True 
 B)False

Question 2

Winslow Corporation reported the following in the stockholders' equity section of its balance sheet at December 31, 2016:   Common stock, $1 stated value $10,000 Additional paid-in capital-common 40,000 Retained earnings 25,000 Total contributed capital and retained earnings $75,000 Less: Treasury stock (at cost $20 per share)  (2,000)  Total stockholders’ equity $73,000\begin{array}{lr}	ext { Common stock, } \$ 1 	ext { stated value } & \$ 10,000 \	ext { Additional paid-in capital-common } & 40,000 \	ext { Retained earnings } & 25,000 \	ext { Total contributed capital and retained earnings } & \$ 75,000 \	ext { Less: Treasury stock (at cost } \$ 20 	ext { per share)  } & (2,000)  \	ext { Total stockholders&#x27; equity } & \$ 73,000\end{array} Common stock, $1 stated value  Additional paid-in capital-common  Retained earnings  Total contributed capital and retained earnings  Less: Treasury stock (at cost $20 per share)   Total stockholders’ equity ​$10,00040,00025,000$75,000(2,000) $73,000​  How many shares of stock are issued?

Accepted Answer

A)   9,000
B)   10,000
C)   10,100
D)   Not enough information to determine.

Question 3

Tarr, a sole proprietorship, had the following balances and transactions during 2016: beginning capital, $40,000; contribution of cash to the business by the owner, $15,000; revenue, $60,000; expenses, $35,000; withdrawal by the owner, $5,000.What is the amount of the ending capital balance?

Accepted Answer

A)   $40,000
B)   $60,000
C)   $75,000
D)   $85,000

Question 4

The all-inclusive income approach requires that all events and transactions that affect income should be reported on the income statement to help prevent the manipulation of income.

Accepted Answer

A) True 
 B)False

Question 5

Select the letter of the term each statement best describes.
-The number of shares issued less the number of shares held as treasury stock.

Accepted Answer

A)  authorized shares
B)  issued shares
C)  outstanding shares
D)  par value
E)  additional paid-in capitalF) retained earningsG) cumulative featureH) participating featureI) callable stockJ) treasury stockK) retirement of stockL) dividend payout ratioM) stock dividendN) stock splitO) market value per shareP) convertible stockQ) book value per share

Question 6

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Accepted Answer

A)   The payment of dividends is at the discretion of the board of directors.
B)   The payment of interest on bonds payable is required by law.
C)   Interest accrues, whereas dividends do not accrue.
D)   The declaration of dividends reduces the amount of income taxes the corporation must pay.

Question 7

Under IFRS, an item such as a convertible bond must be separated into two parts, showing one part in the Liability category and the other part in the Stockholders' Equity category.

Accepted Answer

A) True 
 B)False

Question 8

[APPENDIX] A sole proprietorship is a separate entity for legal purposes.

Accepted Answer

A) True 
 B)False

Question 9

A 15% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Accepted Answer

A) True 
 B)False

Question 10

A _____________________ allows preferred stockholders to share on a percentage basis in the distribution of an abnormally large dividend.

Accepted Answer

participat...

Question 11

FASB's concept of comprehensive income

Accepted Answer

A)   excludes transactions that involve the payment of dividends.
B)   requires that all transactions must be shown on the income statement.
C)   has a primary drawback because it allows management to manipulate the income figure to a certain extent.
D)   allows items that are not necessarily under management's control, such as natural disasters, to be shown as an adjustment of retained earnings.

Question 12

A ________________ allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Accepted Answer

The answer of A ________________ allows the firm to eliminate...

Question 13

[APPENDIX] A balance sheet of a sole proprietorship includes only the business assets and liabilities, not the personal assets of the owner.

Accepted Answer

A) True 
 B)False

Question 14

When a company wishes to purchase and retire its own stock, the company must

Accepted Answer

A)   decrease the stock account balances by the original issue price.
B)   record a gain or loss depending on the difference between original selling price and repurchase cost.
C)   get the approval of the state to do so.
D)   issue a different class of stock to the former stockholders.

Question 15

Comprehensive income is

Accepted Answer

A)   considered an appropriation of retained earnings when reported in the stockholders' equity section of the balance sheet.
B)   the result of all events and transactions that affect income during the accounting period that are reported on the income statement.
C)   reporting all items that are not under management's control on the statement of retained earnings.
D)   an all-inclusive approach to income that includes transactions that affect stockholders' equity with the exception of those transactions that affect owners.

Question 16

A company would repurchase its own stock for all of the following reasons except

Accepted Answer

A)   it needs the stock for employee bonuses.
B)   it wishes to make an investment in its own stock.
C)   it wishes to prevent unwanted takeover attempts.
D)   it wishes to improve the company's financial ratios.

Question 17

A company may prepare a statement of retained earnings instead of a statement of stockholders' equity if the only changes in the stockholders' equity accounts that occurred during the year are earnings and dividends.

Accepted Answer

A) True 
 B)False

Question 18

From the following list, identify each item as operating (O) , investing (I) , financing (F) , or not separately reported on the statement of cash flows (N) .
-Issuance of common stock for equipment

Accepted Answer

A)  Operating-O
B)  Investing-I
C)  Financing-F
D)  Not separately reported-  N \mathrm{N} N

Question 19

A company purchased machinery by issuing 2,000 shares of $3 par value common stock.Since the company is new, there is no established market price for its stock.How would the company record the transaction?

Accepted Answer

A)   In terms of the par value of the stock issued.
B)   At the fair market value of the machine.
C)   At the cost recorded by the previous owner of the machine.
D)   Recording the transaction would be postponed until a market price for the stock could be determined.

Question 20

Preferred stock receives first preference on voting rights.

Accepted Answer

A) True 
 B)False

Exam 11: Stockholders Equity

A stock split is similar to a stock dividend in that it results in additional shares of stock outstanding and is nontaxable.

Correct Answer
verified

A ________________ allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Correct Answer
verified

The all-inclusive income approach requires that all events and transactions that affect income should be reported on the income statement to help prevent the manipulation of income.

Correct Answer
verified

A company may prepare a statement of retained earnings instead of a statement of stockholders' equity if the only changes in the stockholders' equity accounts that occurred during the year are earnings and dividends.

Correct Answer
verified

Select the letter of the term each statement best describes. -The number of shares issued less the number of shares held as treasury stock.

Correct Answer
verified

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Correct Answer
verified

A company purchased machinery by issuing 2,000 shares of $3 par value common stock.Since the company is new, there is no established market price for its stock.How would the company record the transaction?

Correct Answer
verified

From the following list, identify each item as operating (O) , investing (I) , financing (F) , or not separately reported on the statement of cash flows (N) . -Issuance of common stock for equipment

Correct Answer
verified

Correct Answer
verified

[APPENDIX] A sole proprietorship is a separate entity for legal purposes.

Correct Answer
verified

A _____________________ allows preferred stockholders to share on a percentage basis in the distribution of an abnormally large dividend.

Correct Answer
verified
participat...
View Answer

Under IFRS, an item such as a convertible bond must be separated into two parts, showing one part in the Liability category and the other part in the Stockholders' Equity category.

Correct Answer
verified

Preferred stock receives first preference on voting rights.

Correct Answer
verified

A 15% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Correct Answer
verified

Tarr, a sole proprietorship, had the following balances and transactions during 2016: beginning capital, $40,000; contribution of cash to the business by the owner, $15,000; revenue, $60,000; expenses, $35,000; withdrawal by the owner, $5,000.What is the amount of the ending capital balance?

Correct Answer
verified

A company would repurchase its own stock for all of the following reasons except

Correct Answer
verified

When a company wishes to purchase and retire its own stock, the company must

Correct Answer
verified

Comprehensive income is

Correct Answer
verified

[APPENDIX] A balance sheet of a sole proprietorship includes only the business assets and liabilities, not the personal assets of the owner.

Correct Answer
verified

FASB's concept of comprehensive income

Correct Answer
verified

Exam 11: Stockholders Equity

A stock split is similar to a stock dividend in that it results in additional shares of stock outstanding and is nontaxable.

Correct AnswerverifiedShow Answer

A ________________ allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Correct AnswerverifiedShow Answer

The all-inclusive income approach requires that all events and transactions that affect income should be reported on the income statement to help prevent the manipulation of income.

Correct AnswerverifiedShow Answer

A company may prepare a statement of retained earnings instead of a statement of stockholders' equity if the only changes in the stockholders' equity accounts that occurred during the year are earnings and dividends.

Correct AnswerverifiedShow Answer

Select the letter of the term each statement best describes. -The number of shares issued less the number of shares held as treasury stock.

Correct AnswerverifiedShow Answer

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Correct AnswerverifiedShow Answer

A company purchased machinery by issuing 2,000 shares of $3 par value common stock.Since the company is new, there is no established market price for its stock.How would the company record the transaction?

Correct AnswerverifiedShow Answer

From the following list, identify each item as operating (O) , investing (I) , financing (F) , or not separately reported on the statement of cash flows (N) . -Issuance of common stock for equipment

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

[APPENDIX] A sole proprietorship is a separate entity for legal purposes.

Correct AnswerverifiedShow Answer

A _____________________ allows preferred stockholders to share on a percentage basis in the distribution of an abnormally large dividend.

Correct Answerverifiedparticipat...View AnswerShow Answer

Under IFRS, an item such as a convertible bond must be separated into two parts, showing one part in the Liability category and the other part in the Stockholders' Equity category.

Correct AnswerverifiedShow Answer

Preferred stock receives first preference on voting rights.

Correct AnswerverifiedShow Answer

A 15% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Correct AnswerverifiedShow Answer

Tarr, a sole proprietorship, had the following balances and transactions during 2016: beginning capital, $40,000; contribution of cash to the business by the owner, $15,000; revenue, $60,000; expenses, $35,000; withdrawal by the owner, $5,000.What is the amount of the ending capital balance?

Correct AnswerverifiedShow Answer

A company would repurchase its own stock for all of the following reasons except

Correct AnswerverifiedShow Answer

When a company wishes to purchase and retire its own stock, the company must

Correct AnswerverifiedShow Answer

Comprehensive income is

Correct AnswerverifiedShow Answer

[APPENDIX] A balance sheet of a sole proprietorship includes only the business assets and liabilities, not the personal assets of the owner.

Correct AnswerverifiedShow Answer

FASB's concept of comprehensive income

Correct AnswerverifiedShow Answer

Correct Answer
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participat...
View Answer

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