Question 1

Authorized common stock refers to the total number of shares:

Accepted Answer

A)   Outstanding.
B)   Issued.
C)   Issued and outstanding.
D)   That can be issued.E) A) and D)
F) A) and C)

Question 2

On March 31, the board of directors of Shoeboxes, Inc. declares a 100% stock dividend on its 100,000, $0.01 par, common shares. The market price of Shoeboxes common stock is $30 on March 31. Record the stock dividend.

Accepted Answer

The answer of On March 31, the board of directors...

Question 3

The Common Stock account on a company's balance sheet is measured as:

Accepted Answer

A)   The number of common shares outstanding x the stock's par value per share.
B)   The number of common shares outstanding x the stock's current market value per share.
C)   The number of common shares issued x the stock's par value per share.
D)   The number of common shares issued x the stock's current market value per share.E) None of the above
F) A) and B)

Question 4

The disadvantages of the corporate form of business include:

Accepted Answer

A)   Lack of mutual agency.
B)   Additional taxes.
C)   Limited liability.
D)   Ability to raise capital.E) All of the above
F) A) and B)

Question 5

Journal entries to record cash dividends are made on the:

Accepted Answer

A)   declaration date, record date, and payment date.
B)   record date and payment date.
C)   declaration date and payment date.
D)   declaration date and record date.E) None of the above
F) B) and C)

Question 6

Jade Jewelers issued 15,000 shares of $1 par value stock for $20 per share. What is true about the journal entry to record the issuance?

Accepted Answer

A)   Credit Common Stock $300,000.
B)   Credit Cash $300,000.
C)   Credit Common Stock $15,000.
D)   Debit Additional Paid-In Capital $285,000.E) A) and D)
F) A) and C)

Question 7

On December 2, Coley Corp. reacquired 1,000 shares of its $2 par value common stock for $27 each. On December 20, Coley Corp. reissued 400 shares for $15 each. Which of the following is correct regarding the journal entry for the reissued shares?

Accepted Answer

A)   Debit Cash $15,000.
B)   Credit Treasury Stock $10,800.
C)   Credit Paid in Capital - Treasury Stock $5,200.
D)   Credit Treasury Stock $6,000.E) A) and B)
F) All of the above

Question 8

We compute the return on equity ratio by dividing net income by ending stockholders' equity.
We compute the return on equity ratio by dividing net income by average stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 9

Northwest Clothing Supply has the following transactions during the year related to stockholders' equity:

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Record ea...

Question 10

When a company issues 25,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include:

Accepted Answer

A)   A debit to Cash for $25,000.
B)   A debit to Additional Paid-in Capital for $25,000.
C)   A credit to Common Stock for $250,000.
D)   A credit to Additional Paid-in Capital for $225,000.E) B) and C)
F) A) and D)

Question 11

The issuer of a 5% common stock dividend (small stock dividend)  to common stockholders should debit stock dividends for an amount equal to the

Accepted Answer

A)   Book value of the shares issued.
B)   Par or stated value of the shares issued.
C)   Market value of the shares issued.
D)   Minimum legal requirements.E) A) and B)
F) B) and C)

Question 12

The statement of stockholders' equity shows how each equity account changed during the year.

Accepted Answer

A) True 
 B)False

Question 13

Hamilton International issues 5,000 shares of its $1 par value common stock to provide funds for further expansion. If the issue price is $15 per share, what is the entry to record the issuance of the stock?

Accepted Answer

The answer of Hamilton International issues 5,000 shares of its...

Question 14

The Surf's Up issues 1,000 shares of 6%, $100 par value preferred stock at the beginning of 2011. All remaining shares are common stock. The company was not able to pay dividends in 2011, but plans to pay dividends of $18,000 in 2012. Assuming the preferred stock is cumulative, how much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2012?

Accepted Answer

A)   $6,000 to preferred stockholders and $12,000 to common stockholders.
B)   $18,000 to preferred stockholders and $0 to common stockholders.
C)   $12,000 to preferred stockholders and $6,000 to common stockholders.
D)   $9,000 to preferred stockholders and $9,000 to common stockholders.E) All of the above
F) A) and B)

Question 15

We record treasury stock at the cost of the shares reacquired.

Accepted Answer

A) True 
 B)False

Question 16

When treasury stock is resold at a price above cost:

Accepted Answer

A)   A gain account is credited.
B)   A loss is reported.
C)   A revenue account is credited.
D)   Additional Paid-in Capital is increased.E) B) and C)
F) A) and D)

Question 17

Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?

Accepted Answer

A)   Dividend payments can be deducted for income tax purposes but interest payments cannot.
B)   Expansion is accomplished without surrendering ownership control.
C)   The risk of going bankrupt is less.
D)   All of the above are reasons for issuing stock.E) B) and C)
F) B) and D)

Question 18

Convertible preferred stock allows the stockholder to exchange shares of preferred stock for common stock at a specified conversion ratio.

Accepted Answer

A) True 
 B)False

Question 19

Treasury Stock:

Accepted Answer

A)   has a normal credit balance.
B)   decreases stockholders' equity.
C)   is recorded as an investment.
D)   increases stockholders' equity.E) B) and C)
F) A) and B)

Question 20

We can estimate the average purchase cost of treasury stock per share by dividing the treasury stock balance by the number of shares repurchased.

Accepted Answer

A) True 
 B)False

Exam 10: Stockholders Equity

When treasury stock is resold at a price above cost:

Correct Answer
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Convertible preferred stock allows the stockholder to exchange shares of preferred stock for common stock at a specified conversion ratio.

Correct Answer
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Correct Answer
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Journal entries to record cash dividends are made on the:

Correct Answer
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When a company issues 25,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include:

Correct Answer
verified

Northwest Clothing Supply has the following transactions during the year related to stockholders' equity:

Correct Answer
verified
Record ea...
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We record treasury stock at the cost of the shares reacquired.

Correct Answer
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Treasury Stock:

Correct Answer
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We can estimate the average purchase cost of treasury stock per share by dividing the treasury stock balance by the number of shares repurchased.

Correct Answer
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On December 2, Coley Corp. reacquired 1,000 shares of its $2 par value common stock for $27 each. On December 20, Coley Corp. reissued 400 shares for $15 each. Which of the following is correct regarding the journal entry for the reissued shares?

Correct Answer
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The issuer of a 5% common stock dividend (small stock dividend) to common stockholders should debit stock dividends for an amount equal to the

Correct Answer
verified

Hamilton International issues 5,000 shares of its $1 par value common stock to provide funds for further expansion. If the issue price is $15 per share, what is the entry to record the issuance of the stock?

Correct Answer
verified

Authorized common stock refers to the total number of shares:

Correct Answer
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On March 31, the board of directors of Shoeboxes, Inc. declares a 100% stock dividend on its 100,000, $0.01 par, common shares. The market price of Shoeboxes common stock is $30 on March 31. Record the stock dividend.

Correct Answer
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The disadvantages of the corporate form of business include:

Correct Answer
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We compute the return on equity ratio by dividing net income by ending stockholders' equity. We compute the return on equity ratio by dividing net income by average stockholders' equity.

Correct Answer
verified

Jade Jewelers issued 15,000 shares of $1 par value stock for $20 per share. What is true about the journal entry to record the issuance?

Correct Answer
verified

Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?

Correct Answer
verified

The statement of stockholders' equity shows how each equity account changed during the year.

Correct Answer
verified

The Common Stock account on a company's balance sheet is measured as:

Correct Answer
verified

Exam 10: Stockholders Equity

When treasury stock is resold at a price above cost:

Correct AnswerverifiedShow Answer

Convertible preferred stock allows the stockholder to exchange shares of preferred stock for common stock at a specified conversion ratio.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Journal entries to record cash dividends are made on the:

Correct AnswerverifiedShow Answer

When a company issues 25,000 shares of $1 par value common stock for $10 per share, the journal entry for this issuance would include:

Correct AnswerverifiedShow Answer

Northwest Clothing Supply has the following transactions during the year related to stockholders' equity:

Correct Answerverified Record ea...View AnswerShow Answer

We record treasury stock at the cost of the shares reacquired.

Correct AnswerverifiedShow Answer

Treasury Stock:

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We can estimate the average purchase cost of treasury stock per share by dividing the treasury stock balance by the number of shares repurchased.

Correct AnswerverifiedShow Answer

On December 2, Coley Corp. reacquired 1,000 shares of its $2 par value common stock for $27 each. On December 20, Coley Corp. reissued 400 shares for $15 each. Which of the following is correct regarding the journal entry for the reissued shares?

Correct AnswerverifiedShow Answer

The issuer of a 5% common stock dividend (small stock dividend) to common stockholders should debit stock dividends for an amount equal to the

Correct AnswerverifiedShow Answer

Hamilton International issues 5,000 shares of its $1 par value common stock to provide funds for further expansion. If the issue price is $15 per share, what is the entry to record the issuance of the stock?

Correct AnswerverifiedShow Answer

Authorized common stock refers to the total number of shares:

Correct AnswerverifiedShow Answer

On March 31, the board of directors of Shoeboxes, Inc. declares a 100% stock dividend on its 100,000, $0.01 par, common shares. The market price of Shoeboxes common stock is $30 on March 31. Record the stock dividend.

Correct AnswerverifiedShow Answer

The disadvantages of the corporate form of business include:

Correct AnswerverifiedShow Answer

We compute the return on equity ratio by dividing net income by ending stockholders' equity. We compute the return on equity ratio by dividing net income by average stockholders' equity.

Correct AnswerverifiedShow Answer

Jade Jewelers issued 15,000 shares of $1 par value stock for $20 per share. What is true about the journal entry to record the issuance?

Correct AnswerverifiedShow Answer

Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?

Correct AnswerverifiedShow Answer

The statement of stockholders' equity shows how each equity account changed during the year.

Correct AnswerverifiedShow Answer

The Common Stock account on a company's balance sheet is measured as:

Correct AnswerverifiedShow Answer

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Record ea...
View Answer

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