Question 1

Which of the following is a true statement?

Accepted Answer

A)  Stockholders are guaranteed annual dividends.
B)  Stockholders receive their proportionate share of any assets remaining after the corporation pays its debts and liquidates.
C)  Stockholders may authorize a business contract on behalf of the corporation.
D)  Stockholders may vote only if they physically attend the annual stockholders' meeting.

Question 2

Megastar Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $18.25 per share.

What would be the balance in the Common Stock account after the issuance of a 10% stock dividend?

Accepted Answer

A)  $334,000
B)  $604,800
C)  $739,200
D)  $672,000

Question 3

Trent Williams is a sole proprietor of a successful business.He is interested in incorporating to protect his personal assets.Which advantage of incorporation is most applicable? What are other advantages of organizing as a corporate entity?

Accepted Answer

Stockholders are not personally liable f...

Question 4

Which of the following is true of dividends?

Accepted Answer

A)  Dividends are a distribution of cash,stock,or other property to stockholders.
B)  Dividends increase assets and decrease total stockholders' equity of a corporation.
C)  Dividend payments decrease paid-in capital.
D)  Dividend payments increase stockholders' equity.

Question 5

Declaring and paying dividends causes an increase in both assets and stockholders' equity of the corporation.

Accepted Answer

A) True 
 B)False

Question 6

Paid-in capital consists of ________.

Accepted Answer

A)  amounts received from customers
B)  amounts raised by issuing bonds or preferred stocks
C)  earnings generated by the corporation
D)  amounts received from stockholders in exchange for stock

Question 7

Paid-in capital and retained earnings are internally generated equity.

Accepted Answer

A) True 
 B)False

Question 8

A company cannot report a gain or loss when buying or selling its own stock.

Accepted Answer

A) True 
 B)False

Question 9

When a 5% stock dividend is declared,which account is debited?

Accepted Answer

A)  Common Stock-Par Value
B)  Common Stock Dividend Distributable
C)  Stock Dividends
D)  Paid-In Capital in Excess of Par-Common

Question 10

The retained earnings of a corporation is ________.

Accepted Answer

A)  internally generated equity that is earned by profitable operations that is not distributed to stockholders
B)  externally generated equity that is contributed by shareholders
C)  externally generated equity that is acquired from banks and other creditors
D)  internally generated equity that is received from employee stock purchases

Question 11

The corporate charter identifies the maximum number of shares of stock the corporation may issue,which is called "available for issue" stock.

Accepted Answer

A) True 
 B)False

Question 12

On the ________,cash dividends become a liability of a corporation.

Accepted Answer

A)  declaration date
B)  date of record
C)  last day of the fiscal year
D)  payment date

Question 13

Which of the following statements is true?

Accepted Answer

A)  Both a stock dividend and a stock split increase the balance in the common stock account.
B)  Both a stock dividend and a stock split reduce retained earnings.
C)  Neither a stock dividend nor a stock split will result in net gains or losses.
D)  A stock split increases the par value per share of the stock. C

Question 14

A corporation issues 16,000 shares of its $3 stated value common shares.The issue price is $9 per share.The credit to the Common Stock account is $144,000.

Accepted Answer

A) True 
 B)False

Question 15

Both common and preferred stock carry the same degree of investment risk for the stockholder.

Accepted Answer

A) True 
 B)False

Question 16

Charter Schools,Inc.is authorized to issue 500,000 shares of $2 par common stock.The company issued 106,000 shares at $6 per share.When the market price of common stock was $10 per share,Charter declared and distributed a 10% stock dividend.Later,Charter declared and paid a $0.10 per share cash dividend.
Prepare the journal entries to record these transactions.Explanations are not required.

Accepted Answer

The answer of Charter Schools,Inc.is authorized to issue 500,000 shares...

Question 17

Which of the following statements is true?

Accepted Answer

A)  Appropriations of retained earnings require journal entries,but restrictions on retained earnings are usually reported in notes to the financial statements.
B)  No journal entries are needed to appropriate or restrict retained earnings.
C)  Both appropriations and restrictions of retained earnings require journal entries.
D)  Restrictions on retained earnings must be journalized,but appropriations are usually reported in notes to the financial statements. A

Question 18

The price/earnings ratio is the ratio of the earnings per share of common stock to the market price of a share of the common stock.

Accepted Answer

A) True 
 B)False

Question 19

Jefferson Anderson is a sole proprietor of a successful business.He is interested in incorporating to protect his personal assets.What are some disadvantages of organizing as a corporate entity?

Accepted Answer

Some disadvantages of organizing as a co...

Question 20

The purchase of treasury stock ________.

Accepted Answer

A)  decreases assets and stockholders' equity
B)  increases assets and stockholders' equity
C)  increases assets and decreases stockholders' equity
D)  decreases assets and increases stockholders' equity

Exam 13: Stockholders Equity

Which of the following is a true statement?

Correct Answer
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Megastar Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $18.25 per share. What would be the balance in the Common Stock account after the issuance of a 10% stock dividend?

Correct Answer
verified

Trent Williams is a sole proprietor of a successful business.He is interested in incorporating to protect his personal assets.Which advantage of incorporation is most applicable? What are other advantages of organizing as a corporate entity?

Correct Answer
verified
Stockholders are not personally liable f...
View Answer

Which of the following is true of dividends?

Correct Answer
verified

Declaring and paying dividends causes an increase in both assets and stockholders' equity of the corporation.

Correct Answer
verified

Paid-in capital consists of ________.

Correct Answer
verified

Paid-in capital and retained earnings are internally generated equity.

Correct Answer
verified

A company cannot report a gain or loss when buying or selling its own stock.

Correct Answer
verified

When a 5% stock dividend is declared,which account is debited?

Correct Answer
verified

The retained earnings of a corporation is ________.

Correct Answer
verified

The corporate charter identifies the maximum number of shares of stock the corporation may issue,which is called "available for issue" stock.

Correct Answer
verified

On the ________,cash dividends become a liability of a corporation.

Correct Answer
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Which of the following statements is true?

Correct Answer
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C

A corporation issues 16,000 shares of its $3 stated value common shares.The issue price is $9 per share.The credit to the Common Stock account is $144,000.

Correct Answer
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Both common and preferred stock carry the same degree of investment risk for the stockholder.

Correct Answer
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Correct Answer
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Which of the following statements is true?

Correct Answer
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A

The price/earnings ratio is the ratio of the earnings per share of common stock to the market price of a share of the common stock.

Correct Answer
verified

Jefferson Anderson is a sole proprietor of a successful business.He is interested in incorporating to protect his personal assets.What are some disadvantages of organizing as a corporate entity?

Correct Answer
verified
Some disadvantages of organizing as a co...
View Answer

The purchase of treasury stock ________.

Correct Answer
verified

Exam 13: Stockholders Equity

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Megastar Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $18.25 per share. What would be the balance in the Common Stock account after the issuance of a 10% stock dividend?

Correct AnswerverifiedShow Answer

Trent Williams is a sole proprietor of a successful business.He is interested in incorporating to protect his personal assets.Which advantage of incorporation is most applicable? What are other advantages of organizing as a corporate entity?

Correct AnswerverifiedStockholders are not personally liable f...View AnswerShow Answer

Which of the following is true of dividends?

Correct AnswerverifiedShow Answer

Declaring and paying dividends causes an increase in both assets and stockholders' equity of the corporation.

Correct AnswerverifiedShow Answer

Paid-in capital consists of ________.

Correct AnswerverifiedShow Answer

Paid-in capital and retained earnings are internally generated equity.

Correct AnswerverifiedShow Answer

A company cannot report a gain or loss when buying or selling its own stock.

Correct AnswerverifiedShow Answer

When a 5% stock dividend is declared,which account is debited?

Correct AnswerverifiedShow Answer

The retained earnings of a corporation is ________.

Correct AnswerverifiedShow Answer

The corporate charter identifies the maximum number of shares of stock the corporation may issue,which is called "available for issue" stock.

Correct AnswerverifiedShow Answer

On the ________,cash dividends become a liability of a corporation.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedC

A corporation issues 16,000 shares of its $3 stated value common shares.The issue price is $9 per share.The credit to the Common Stock account is $144,000.

Correct AnswerverifiedShow Answer

Both common and preferred stock carry the same degree of investment risk for the stockholder.

Correct AnswerverifiedShow Answer

Correct Answerverified11ea86ed_2c51_f103_8b27_133339c70e75_TB3056_00

Which of the following statements is true?

Correct AnswerverifiedA

The price/earnings ratio is the ratio of the earnings per share of common stock to the market price of a share of the common stock.

Correct AnswerverifiedShow Answer

Jefferson Anderson is a sole proprietor of a successful business.He is interested in incorporating to protect his personal assets.What are some disadvantages of organizing as a corporate entity?

Correct AnswerverifiedSome disadvantages of organizing as a co...View AnswerShow Answer

The purchase of treasury stock ________.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Stockholders are not personally liable f...
View Answer

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C

Correct Answer
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11ea86ed_2c51_f103_8b27_133339c70e75_TB3056_00

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A

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Some disadvantages of organizing as a co...
View Answer

Correct Answer
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