Question 1

Stock dividends cause a reduction in retained earnings, but they never reduce total shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 2

Common shareholders usually have all of the following rights except:

Accepted Answer

A)  To share in the profits.
B)  To share in assets upon liquidation.
C)  To elect a board of directors.
D)  To participate in the day-to-day operations.E) A) and D)
F) A) and C)

Question 3

What was the amount of net income earned by Levi during 2013?

Accepted Answer

A)  $0.
B)  $40 million.
C)  $62 million.
D)  Cannot be determined from the given information.E) None of the above
F) B) and D)

Question 4

Two of the three primary account classifications within shareholders' equity are:

Accepted Answer

A)  Preferred stock and retained earnings.
B)  The par value of common stock and retained earnings.
C)  Paid-in capital and retained earnings.
D)  Preferred and common stock.E) None of the above
F) A) and B)

Question 5

The common stock account in a company's balance sheet is measured as:

Accepted Answer

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

Question 6

Stock designated as preferred usually has preferential rights over other classes of stock relative to dividends and liquidating distributions.

Accepted Answer

A) True 
 B)False

Question 7

On January 1, 2013, the board of directors of Goby Inc. declared a $540,000 dividend. The following data is from the balance sheet of Goby on that date:  How much is the liquidating dividend?

Accepted Answer

A)  $140,000.
B)  $240,000.
C)  $290,000.
D)  None of the above is correct.E) A) and C)
F) C) and D)

Question 8

The Model Business Corporation Act:

Accepted Answer

A)  Uses the words "common" and "preferred" in describing distinguishing characteristics of stock.
B)  Defines legal capital as the amount of net assets not available for distribution to shareholders.
C)  Provides guidance for choosing an appropriate par value for new issues of stock.
D)  Has affected the laws of most states.E) B) and D)
F) B) and C)

Question 9

Montgomery & Co., a well-established law firm, provided 500 hours of its time to Fink Corporation in exchange for 1,000 shares of Fink's $5 par common stock. Montgomery's usual billing rate is $700 per hour, and Fink's stock has a book value of $250 per share. By what amount will Fink's paid-in capital-excess of par increase for this transaction?

Accepted Answer

A)  $345,000.
B)  $295,000.
C)  $350,000.
D)  $300,000.E) B) and D)
F) B) and C)

Question 10

Treasury stock transactions never increase retained earnings or net income.

Accepted Answer

A) True 
 B)False

Question 11

On January 1, 2013, Gerlach Inc. had the following account balances in its shareholders' equity accounts.  During 2013, Gerlach Inc. had several transactions relating to common stock.  Required:
Record the above transactions and events in journal entry format.

Accepted Answer

The answer of On January 1, 2013, Gerlach Inc. had...

Question 12

Under GAAP, the declaration of a property dividend may require the recognition of a gain or loss if the fair value of the property is different from its carrying value on the declaration date.

Accepted Answer

A) True 
 B)False

Question 13

The corporate charter sometimes is known as (a) :

Accepted Answer

A)  Articles of incorporation.
B)  Statement of organization.
C)  By-laws.
D)  Registration statement.E) B) and C)
F) A) and B)

Exam 18: Shareholders Equity Key

Under GAAP, the declaration of a property dividend may require the recognition of a gain or loss if the fair value of the property is different from its carrying value on the declaration date.

Correct Answer
verified

Stock designated as preferred usually has preferential rights over other classes of stock relative to dividends and liquidating distributions.

Correct Answer
verified

The common stock account in a company's balance sheet is measured as:

Correct Answer
verified

On January 1, 2013, the board of directors of Goby Inc. declared a $540,000 dividend. The following data is from the balance sheet of Goby on that date: How much is the liquidating dividend?

Correct Answer
verified

Treasury stock transactions never increase retained earnings or net income.

Correct Answer
verified

On January 1, 2013, Gerlach Inc. had the following account balances in its shareholders' equity accounts. During 2013, Gerlach Inc. had several transactions relating to common stock. Required: Record the above transactions and events in journal entry format.

Correct Answer
verified

Correct Answer
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The Model Business Corporation Act:

Correct Answer
verified

Common shareholders usually have all of the following rights except:

Correct Answer
verified

Two of the three primary account classifications within shareholders' equity are:

Correct Answer
verified

What was the amount of net income earned by Levi during 2013?

Correct Answer
verified

Stock dividends cause a reduction in retained earnings, but they never reduce total shareholders' equity.

Correct Answer
verified

The corporate charter sometimes is known as (a) :

Correct Answer
verified

Exam 18: Shareholders Equity Key

Under GAAP, the declaration of a property dividend may require the recognition of a gain or loss if the fair value of the property is different from its carrying value on the declaration date.

Correct AnswerverifiedShow Answer

Stock designated as preferred usually has preferential rights over other classes of stock relative to dividends and liquidating distributions.

Correct AnswerverifiedShow Answer

The common stock account in a company's balance sheet is measured as:

Correct AnswerverifiedShow Answer

On January 1, 2013, the board of directors of Goby Inc. declared a $540,000 dividend. The following data is from the balance sheet of Goby on that date: How much is the liquidating dividend?

Correct AnswerverifiedShow Answer

Treasury stock transactions never increase retained earnings or net income.

Correct AnswerverifiedShow Answer

On January 1, 2013, Gerlach Inc. had the following account balances in its shareholders' equity accounts. During 2013, Gerlach Inc. had several transactions relating to common stock. Required: Record the above transactions and events in journal entry format.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Model Business Corporation Act:

Correct AnswerverifiedShow Answer

Common shareholders usually have all of the following rights except:

Correct AnswerverifiedShow Answer

Two of the three primary account classifications within shareholders' equity are:

Correct AnswerverifiedShow Answer

What was the amount of net income earned by Levi during 2013?

Correct AnswerverifiedShow Answer

Stock dividends cause a reduction in retained earnings, but they never reduce total shareholders' equity.

Correct AnswerverifiedShow Answer

The corporate charter sometimes is known as (a) :

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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