Question 1

A company issued 60 shares of $100 par value common stock for $7,000 cash.The total amount of paid-in capital is:

Accepted Answer

A)  $100.
B)  $600.
C)  $1,000.
D)  $6,000.
E)  $7,000.F) A) and B)
G) All of the above

Question 2

The number of shares that a corporation's charter allows it to sell is referred to as:

Accepted Answer

A)  Issued stock.
B)  Outstanding stock.
C)  Common stock.
D)  Preferred stock.
E)  Authorized stock.F) A) and B)
G) A) and C)

Question 3

Changes in accounting estimates are accounted for in current and future periods.

Accepted Answer

A) True 
 B)False

Question 4

Slate Corporation had the following balances in its stockholders' equity accounts at December 31,2017:
  The following transactions occurred during 2018:
  Based on the above information,prepare a statement of stockholders' equity for 2018.Use the form below.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> *(20,000 − 1,000 + ...

Question 5

A dividend preference for preferred stock means that:

Accepted Answer

A)  Preferred stockholders are allocated their dividends before dividends are allocated to 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.F) A) and C)
G) A) and E)

Question 6

A corporation may not legally give shares of its stock to promoters in exchange for their services in organizing the corporation.

Accepted Answer

A) True 
 B)False

Question 7

A company reports the following stockholders' equity:
  Compute the (1)number of common shares outstanding and (2)book value per common share.

Accepted Answer

(1)Number of common shares out...

Question 8

Retained earnings:

Accepted Answer

A)  Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.
B)  Can only be appropriated by setting aside a cash fund.
C)  Represent an amount of cash available to pay shareholders.
D)  Are never adjusted for anything other than net income or dividends.
E)  Represents the amount shareholders are guaranteed to receive upon company liquidation.F) None of the above
G) B) and D)

Question 9

________ are corrections of material errors in prior period financial statements.

Accepted Answer

Prior peri...

Question 10

A company paid $0.48 in cash dividends per share.Its earnings per share is $3.20 and its market price per share is $20.00.Its dividend yield equals:

Accepted Answer

A)  2.4%.
B)  6.25%.
C)  6.4%.
D)  6.67%.
E)  15.00%.F) A) and D)
G) C) and D) A

Question 11

Minimum legal capital requirements are intended to protect creditors.

Accepted Answer

A) True 
 B)False

Question 12

Boron Company is authorized to issue 50,000 shares of $50 par value,8%,cumulative,fully participating preferred stock,and 750,000 shares of $5 par value common stock.Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

Accepted Answer

The answer of Boron Company is authorized to issue 50,000...

Question 13

On September 20,Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000.Prepare the general journal entry to record this transaction.

Accepted Answer

The answer of On September 20,Fletcher Corporation issued 25,000 shares...

Question 14

Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares.At the time of the stock dividend,the market value per share was $12.The entry to record this dividend is:

Accepted Answer

A)  Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $36,000.
B)  Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $30,000; credit Paid-In Capital in Excess of Par Value,Common Stock $6,000.
C)  Debit Common Stock Dividend Distributable $36,000; credit Retained Earnings $36,000.
D)  Debit Retained Earnings $30,000; credit Common Stock Dividend Distributable $30,000.
E)  No entry is needed.F) C) and E)
G) C) and D)

Question 15

Shareholders in a corporation have the power to bind the corporation to contracts.

Accepted Answer

A) True 
 B)False

Question 16

Stated value of no-par stock is:

Accepted Answer

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 paid-in by the stockholder.
E)  An amount assigned to no-par stock by the corporation's board of directors.F) A) and E)
G) B) and E)

Question 17

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

Accepted Answer

A)  Always equal to its par value.
B)  Always equal to its stated value.
C)  Referred to as paid-in capital.
D)  Referred to as retained earnings.
E)  Always below its stated value.F) A) and B)
G) A) and D)

Question 18

Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.

Accepted Answer

The price-earnings ratio of a common stock is computed by dividing the stock's market value per share by its earnings per share.The price-earnings ratio represents the stock market's expectations of a company's future performance.Some analysts view a high PE (greater than 20 to 25,for instance)ratio as an indication that a stock is overvalued.A low ratio (less than 5 to 8)may indicate that a stock is undervalued.

Question 19

In many states,the minimum amount that stockholders must contribute to the corporation,and which is intended to protect the creditors of the corporation,is called the:

Accepted Answer

A)  Par value of preferred.
B)  Minimum legal capital.
C)  Premium capital.
D)  Stated value.
E)  Working capital.F) C) and D)
G) B) and E) B

Question 20

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 300,000 shares of preferred stock outstanding.
(b)Declared and distributed an 8% 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 400,000 shares of $10 par value common stock outstanding.
(d)Declared and distributed a 35% stock dividend on 700,000 common shares of $1 par value common stock outstanding.Market price per common share on this date was $20.

Accepted Answer

The answer of For each of the following independent transactions...

Exam 11: Reporting and Analyzing Equity

A company issued 60 shares of $100 par value common stock for $7,000 cash.The total amount of paid-in capital is:

Correct Answer
verified

The number of shares that a corporation's charter allows it to sell is referred to as:

Correct Answer
verified

Changes in accounting estimates are accounted for in current and future periods.

Correct Answer
verified

Slate Corporation had the following balances in its stockholders' equity accounts at December 31,2017: The following transactions occurred during 2018: Based on the above information,prepare a statement of stockholders' equity for 2018.Use the form below.

Correct Answer
verified
*(20,000 − 1,000 + ...
View Answer

A dividend preference for preferred stock means that:

Correct Answer
verified

A corporation may not legally give shares of its stock to promoters in exchange for their services in organizing the corporation.

Correct Answer
verified

A company reports the following stockholders' equity: Compute the (1)number of common shares outstanding and (2)book value per common share.

Correct Answer
verified
(1)Number of common shares out...
View Answer

Retained earnings:

Correct Answer
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________ are corrections of material errors in prior period financial statements.

Correct Answer
verified
Prior peri...
View Answer

A company paid $0.48 in cash dividends per share.Its earnings per share is $3.20 and its market price per share is $20.00.Its dividend yield equals:

Correct Answer
verified
A

Minimum legal capital requirements are intended to protect creditors.

Correct Answer
verified

Boron Company is authorized to issue 50,000 shares of $50 par value,8%,cumulative,fully participating preferred stock,and 750,000 shares of $5 par value common stock.Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

Correct Answer
verified

On September 20,Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000.Prepare the general journal entry to record this transaction.

Correct Answer
verified

Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares.At the time of the stock dividend,the market value per share was $12.The entry to record this dividend is:

Correct Answer
verified

Shareholders in a corporation have the power to bind the corporation to contracts.

Correct Answer
verified

Stated value of no-par stock is:

Correct Answer
verified

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

Correct Answer
verified

Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.

In many states,the minimum amount that stockholders must contribute to the corporation,and which is intended to protect the creditors of the corporation,is called the:

Correct Answer
verified
B

Correct Answer
verified

Exam 11: Reporting and Analyzing Equity

A company issued 60 shares of $100 par value common stock for $7,000 cash.The total amount of paid-in capital is:

Correct AnswerverifiedShow Answer

The number of shares that a corporation's charter allows it to sell is referred to as:

Correct AnswerverifiedShow Answer

Changes in accounting estimates are accounted for in current and future periods.

Correct AnswerverifiedShow Answer

Slate Corporation had the following balances in its stockholders' equity accounts at December 31,2017: The following transactions occurred during 2018: Based on the above information,prepare a statement of stockholders' equity for 2018.Use the form below.

Correct Answerverified *(20,000 − 1,000 + ...View AnswerShow Answer

A dividend preference for preferred stock means that:

Correct AnswerverifiedShow Answer

A corporation may not legally give shares of its stock to promoters in exchange for their services in organizing the corporation.

Correct AnswerverifiedShow Answer

A company reports the following stockholders' equity: Compute the (1)number of common shares outstanding and (2)book value per common share.

Correct Answerverified(1)Number of common shares out...View AnswerShow Answer

Retained earnings:

Correct AnswerverifiedShow Answer

________ are corrections of material errors in prior period financial statements.

Correct AnswerverifiedPrior peri...View AnswerShow Answer

A company paid $0.48 in cash dividends per share.Its earnings per share is $3.20 and its market price per share is $20.00.Its dividend yield equals:

Correct AnswerverifiedA

Minimum legal capital requirements are intended to protect creditors.

Correct AnswerverifiedShow Answer

Boron Company is authorized to issue 50,000 shares of $50 par value,8%,cumulative,fully participating preferred stock,and 750,000 shares of $5 par value common stock.Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

Correct AnswerverifiedShow Answer

On September 20,Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000.Prepare the general journal entry to record this transaction.

Correct AnswerverifiedShow Answer

Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares.At the time of the stock dividend,the market value per share was $12.The entry to record this dividend is:

Correct AnswerverifiedShow Answer

Shareholders in a corporation have the power to bind the corporation to contracts.

Correct AnswerverifiedShow Answer

Stated value of no-par stock is:

Correct AnswerverifiedShow Answer

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

Correct AnswerverifiedShow Answer

Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.

In many states,the minimum amount that stockholders must contribute to the corporation,and which is intended to protect the creditors of the corporation,is called the:

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

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*(20,000 − 1,000 + ...
View Answer

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(1)Number of common shares out...
View Answer

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Prior peri...
View Answer

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A

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B

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