Question 1

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.

Question 2

If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the account

Accepted Answer

A)   Common Stock will be credited for $140,000.
B)   Paid-in Capital in Excess of Par Value will be credited for $20,000.
C)   Paid-in Capital in Excess of Par Value will be credited for $120,000.
D)   Cash will be debited for $120,000.

Question 3

Herman Corporation had net income of $120,000 and paid dividends of $24,000 to common stockholders and $20,000 to preferred stockholders in 2014. Herman Corporation's common stockholders' equity at the beginning and end of 2014s was $450,000 and $550,000, respectively. Herman Corporation's return on common stockholders' equity is

Accepted Answer

A)   24.0%.
B)   20.0%.
C)   19.2%.
D)   15.2%.

Question 4

The payout ratio is computed by dividing total cash dividends paid on common stock by retained earnings.

Accepted Answer

A) True 
 B)False

Question 5

Paid-in Capital in Excess of Par Value

Accepted Answer

A)   is credited when no-par stock does not have a stated value.
B)   is reported as part of paid-in capital on the balance sheet.
C)   represents the amount of legal capital.
D)   normally has a debit balance.

Question 6

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 of the board of directors before selling shares.
D)   A stockholder must obtain permission from at least three other stockholders before selling shares.

Question 7

If Lantz Company issues 5,000 shares of $5 par value common stock for $210,000, the account

Accepted Answer

A)   Common Stock will be credited for $25,000.
B)   Paid-in Capital in Excess of Par Value will be credited for $25,000.
C)   Paid-in Capital in Excess of Par Value will be credited for $210,000.
D)   Cash will be debited for $185,000.

Question 8

Regular dividends are declared out of

Accepted Answer

A)   paid-in capital in excess of par value.
B)   treasury stock.
C)   common stock.
D)   retained earnings.

Question 9

Corporations generally issue stock dividends in order to

Accepted Answer

A)   increase the market price per share.
B)   exceed stockholders' dividend expectations.
C)   increase the marketability of the stock.
D)   decrease the amount of capital in the corporation.

Question 10

A corporation can be organized for the purpose of making a profit or it may be nonprofit.

Accepted Answer

A) True 
 B)False

Question 11

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $57,500. As a result of this event,

Accepted Answer

A)   Kaplan's Common Stock account decreased $25,000.
B)   Kaplan's total stockholders' equity decreased $57,500.
C)   Kaplan's Paid-in Capital in Excess of Par Value account decreased $32,500.
D)   All of these answer choices are correct.

Question 12

Which one of the following would not be considered an advantage of the corporate form of organization?

Accepted Answer

A)   Limited liability of stockholders.
B)   Separate legal existence.
C)   Continuous life.
D)   Government regulation.

Question 13

For what reasons might a company like IBM repurchase some of its stock (treasury stock)?

Accepted Answer

A corporation may acquire treasury stock...

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized.

Accepted Answer

A) True 
 B)False

Question 16

A net loss

Accepted Answer

A)   occurs if operating expenses exceed cost of goods sold.
B)   is not closed to Retained Earnings if it would result in a debit balance.
C)   is closed to Retained Earnings even if it would result in a debit balance.
D)   is closed to the Paid-in Capital account of the stockholders' equity section of the balance sheet.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

Accepted Answer

A) True 
 B)False

Question 19

Dividends in arrears on cumulative preferred stock

Accepted Answer

A)   never have to be paid, even if common dividends are paid.
B)   must be paid before common stockholders can receive a dividend.
C)   should be recorded as a current liability until they are paid.
D)   enable the preferred stockholders to share equally in corporate earnings with the common stockholders.

Question 20

A corporation must be incorporated in each state in which it does business.

Accepted Answer

A) True 
 B)False

Exam 11: Reporting and Analyzing Stockholders Equity

Paid-in Capital in Excess of Par Value

Correct Answer
verified

Corporations generally issue stock dividends in order to

Correct Answer
verified

The payout ratio is computed by dividing total cash dividends paid on common stock by retained earnings.

Correct Answer
verified

A net loss

Correct Answer
verified

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $57,500. As a result of this event,

Correct Answer
verified

If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the account

Correct Answer
verified

If Lantz Company issues 5,000 shares of $5 par value common stock for $210,000, the account

Correct Answer
verified

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

Correct Answer
verified

Correct Answer
verified

Which one of the following would not be considered an advantage of the corporate form of organization?

Correct Answer
verified

For what reasons might a company like IBM repurchase some of its stock (treasury stock)?

Correct Answer
verified
A corporation may acquire treasury stock...
View Answer

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

Correct Answer
verified

On the dividend record date

Correct Answer
verified

Dividends in arrears on cumulative preferred stock

Correct Answer
verified

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

Correct Answer
verified

A corporation can be organized for the purpose of making a profit or it may be nonprofit.

Correct Answer
verified

As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized.

Correct Answer
verified

Regular dividends are declared out of

Correct Answer
verified

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

Correct Answer
verified

A corporation must be incorporated in each state in which it does business.

Correct Answer
verified

Exam 11: Reporting and Analyzing Stockholders Equity

Paid-in Capital in Excess of Par Value

Correct AnswerverifiedShow Answer

Corporations generally issue stock dividends in order to

Correct AnswerverifiedShow Answer

The payout ratio is computed by dividing total cash dividends paid on common stock by retained earnings.

Correct AnswerverifiedShow Answer

A net loss

Correct AnswerverifiedShow Answer

Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued $10 par common stock for $57,500. As a result of this event,

Correct AnswerverifiedShow Answer

If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the account

Correct AnswerverifiedShow Answer

If Lantz Company issues 5,000 shares of $5 par value common stock for $210,000, the account

Correct AnswerverifiedShow Answer

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following would not be considered an advantage of the corporate form of organization?

Correct AnswerverifiedShow Answer

For what reasons might a company like IBM repurchase some of its stock (treasury stock)?

Correct AnswerverifiedA corporation may acquire treasury stock...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

On the dividend record date

Correct AnswerverifiedShow Answer

Dividends in arrears on cumulative preferred stock

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A corporation can be organized for the purpose of making a profit or it may be nonprofit.

Correct AnswerverifiedShow Answer

As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value of the shares authorized.

Correct AnswerverifiedShow Answer

Regular dividends are declared out of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A corporation must be incorporated in each state in which it does business.

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
A corporation may acquire treasury stock...
View Answer

Correct Answer
verified

Correct Answer
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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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Correct Answer
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