Question 1

The acquisition of treasury stock by a corporation increases total assets and total stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 2

A stock dividend is a pro rata distribution of cash to a corporation's stockholders.

Accepted Answer

A) True 
 B)False

Question 3

Cerner Corporation began business by issuing 300,000 shares of $5 par value common stock for $24 per share.During its first year, the corporation sustained a net loss of $50,000.The year-end balance sheet would show

Accepted Answer

A)  Common Stock of $1,500,000.
B)  Common Stock of $7,200,000.
C)  total paid-in capital of $7,140,000.
D)  total paid-in capital of $5,700,000.E) A) and B)
F) All of the above

Question 4

Dividends are predominantly paid in

Accepted Answer

A)  scrip.
B)  property.
C)  cash.
D)  stock.E) A) and D)
F) A) and B)

Question 5

When stock is issued in exchange for a noncash asset, the value recorded for the shares issued is best determined by

Accepted Answer

A)  the book value of the noncash asset.
B)  the market value of the shares.
C)  the par value of the shares.
D)  the contributed capital of the shares.E) A) and B)
F) B) and C)

Question 6

Both large and small stock dividends will cause a decrease in retained earnings for the market value of the shares issued at the date the dividend is declared.

Accepted Answer

A) True 
 B)False

Question 7

Retained earnings are occasionally restricted

Accepted Answer

A)  to set aside cash for dividends.
B)  to keep the legal capital associated with paid-in capital intact.
C)  due to contractual loan restrictions.
D)  if preferred dividends are in arrears.E) B) and D)
F) B) and C)

Question 8

On the dividend record date,

Accepted Answer

A)  a dividend becomes a current obligation.
B)  no entry is required.
C)  an entry may be required if it is a stock dividend.
D)  Dividends Payable is debited.E) B) and C)
F) A) and D)

Question 9

Two classifications appearing in the paid-in capital section of the balance sheet are

Accepted Answer

A)  preferred stock and common stock.
B)  paid-in capital and retained earnings.
C)  capital stock and additional paid-in capital.
D)  capital stock and treasury stock.E) A) and B)
F) B) and D)

Question 10

All of the following are normally found in a corporation's stockholders' equity section except

Accepted Answer

A)  dividends in arrears.
B)  common stock.
C)  paid-in capital.
D)  retained earnings.E) C) and D)
F) B) and D)

Question 11

CAB Inc.has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2020.What is the annual dividend on the preferred stock?

Accepted Answer

A)  $50 per share.
B)  $5,000 in total.
C)  $500 in total.
D)  $0.50 per share.E) A) and B)
F) C) and D)

Question 12

On January 1, Ripken Corporation had 80,000 shares of $10 par value common stock outstanding.On May 7, the company declared a 10% stock dividend to stockholders of record on May 21.The market value of the stock was $13 on May 7.The entry to record the transaction of May 7 would include a

Accepted Answer

A)  debit to Stock Dividends for $104,000.
B)  credit to Cash for $104,000.
C)  credit to Common Stock Dividends Distributable for $104,000.
D)  credit to Common Stock Dividends Distributable for $24,000.E) C) and D)
F) B) and C)

Question 13

Which of the following statements reflects the transferability of ownership rights in a corporation?

Accepted Answer

A)  If a stockholder decides to transfer ownership, he must transfer all of his shares.
B)  A stockholder may dispose of part or all of his shares.
C)  A stockholder must obtain permission from the board of directors before selling shares.
D)  A stockholder must obtain permission from at least three other stockholders before selling shares.E) None of the above
F) C) and D)

Question 14

The board of directors of Bosco Company declared a cash dividend on November 15, 2020, to be paid on December 15, 2020, to stockholders owning the stock on November 30, 2020.Given these facts, the date of November 30, 2020, is referred to as the

Accepted Answer

A)  declaration date.
B)  record date.
C)  payment date.
D)  ex-dividend date.E) B) and C)
F) A) and B)

Question 15

Paid-in capital is the amount paid into the corporation by stockholders in exchange for shares of ownership.

Accepted Answer

A) True 
 B)False

Question 16

In the stockholders' equity section of the balance sheet,

Accepted Answer

A)  Common Stock Dividends Distributable will be classified as part of additional paid-in capital.
B)  Common Stock Dividends Distributable will appear in its own subsection of the stockholders' equity.
C)  Additional Paid-in Capital appears under the sub-section paid-in capital.
D)  Dividends in Arrears will appear as a restriction of retained earnings.E) A) and D)
F) A) and B)

Question 17

Both large and small stock dividends will cause an increase in total stockholders' equity at the date the dividend is declared.

Accepted Answer

A) True 
 B)False

Question 18

Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share.In the stockholders' equity section, the effects of the transaction above will be reported

Accepted Answer

A)  entirely within the capital stock section.
B)  entirely within the additional paid-in capital section.
C)  under both the capital stock and additional paid-in capital sections.
D)  entirely under the retained earnings section.E) A) and B)
F) A) and C)

Question 19

When preferred stock is cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Accepted Answer

A) True 
 B)False

Question 20

The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock.

Accepted Answer

A) True 
 B)False

Exam 11: Reporting and Analyzing Stockholders Equity

When preferred stock is cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Correct AnswerverifiedShow Answer

Paid-in capital is the amount paid into the corporation by stockholders in exchange for shares of ownership.

Correct AnswerverifiedShow Answer

The acquisition of treasury stock by a corporation increases total assets and total stockholders' equity.

Correct AnswerverifiedShow Answer

Both large and small stock dividends will cause an increase in total stockholders' equity at the date the dividend is declared.

Correct AnswerverifiedShow Answer

On January 1, Ripken Corporation had 80,000 shares of $10 par value common stock outstanding.On May 7, the company declared a 10% stock dividend to stockholders of record on May 21.The market value of the stock was $13 on May 7.The entry to record the transaction of May 7 would include a

Correct AnswerverifiedShow Answer

Two classifications appearing in the paid-in capital section of the balance sheet are

Correct AnswerverifiedShow Answer

Retained earnings are occasionally restricted

Correct AnswerverifiedShow Answer

All of the following are normally found in a corporation's stockholders' equity section except

Correct AnswerverifiedShow Answer

Which of the following statements reflects the transferability of ownership rights in a corporation?

Correct AnswerverifiedShow Answer

When stock is issued in exchange for a noncash asset, the value recorded for the shares issued is best determined by

Correct AnswerverifiedShow Answer

Both large and small stock dividends will cause a decrease in retained earnings for the market value of the shares issued at the date the dividend is declared.

Correct AnswerverifiedShow Answer

The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock.

Correct AnswerverifiedShow Answer

A stock dividend is a pro rata distribution of cash to a corporation's stockholders.

Correct AnswerverifiedShow Answer

Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share.In the stockholders' equity section, the effects of the transaction above will be reported

Correct AnswerverifiedShow Answer

The board of directors of Bosco Company declared a cash dividend on November 15, 2020, to be paid on December 15, 2020, to stockholders owning the stock on November 30, 2020.Given these facts, the date of November 30, 2020, is referred to as the

Correct AnswerverifiedShow Answer

Dividends are predominantly paid in

Correct AnswerverifiedShow Answer

Cerner Corporation began business by issuing 300,000 shares of $5 par value common stock for $24 per share.During its first year, the corporation sustained a net loss of $50,000.The year-end balance sheet would show

Correct AnswerverifiedShow Answer

In the stockholders' equity section of the balance sheet,

Correct AnswerverifiedShow Answer

On the dividend record date,

Correct AnswerverifiedShow Answer

CAB Inc.has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2020.What is the annual dividend on the preferred stock?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified