Question 1

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Accepted Answer

A)  increase total liabilities and decrease stockholders' equity.
B)  increase total expenses and decrease assets.
C)  increase total assets and increase stockholders' equity.
D)  decrease total assets and decrease stockholders' equity.E) B) and C)
F) A) and B)

Question 2

Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.

Accepted Answer

A) True 
 B)False

Question 3

Columbia Clay,Inc.issues 2 million shares of preferred stock with a par value of $2 at its market price of $26 per share.The issuance should be recorded with a debit to Cash for:

Accepted Answer

A)  $52 million and a credit to Preferred Stock for $52 million.
B)  $4 million and a credit to Preferred Stock for $4 million.
C)  $52 million,a credit to Additional Paid-in Capital for $4 million,and a credit to Preferred Stock for $48 million.
D)  $52 million,a credit to Preferred Stock for $4 million,and a credit to Additional Paid-in Capital for $48 million.E) B) and C)
F) All of the above

Question 4

A stock dividend is considered a large stock dividend if it is ________ than 25% of the outstanding shares,and it is recorded at the ________ value of the additional shares.

Accepted Answer

A)  more;par
B)  less;par
C)  more;market
D)  less;marketE) A) and B)
F) A) and C)

Question 5

One of the advantages of a partnership is:

Accepted Answer

A)  limited liability.
B)  the salaries of the partners can be written off as an expense.
C)  ease of formation.
D)  income tax is paid by the business.E) C) and D)
F) B) and D)

Question 6

Taggart Company has a P/E ratio of 13 in year 2016 and 12.5 in 2017.In 2018,its P/E ratio is 19.5.The best way to interpret these data is to conclude that:

Accepted Answer

A)  the stock is overpriced and should be sold.
B)  the stock has great growth capacity and should be bought.
C)  other financial results and news should be examined to determine the cause of the P/E ratio change.
D)  the stock is underpriced and should be bought.E) B) and D)
F) All of the above

Question 7

Equity and debt financing both have their advantages and disadvantages.Which of the following pairs of phrases below accurately reflect the advantages of both types of financing?      Debt Financing  Equity Financing  D)   Dividends are optional  Interest is tax deductible \begin{array}{|l|l|l|}\hline & 	ext { Debt Financing } & 	ext { Equity Financing } \\hline 	ext { D)  } & 	ext { Dividends are optional } & 	ext { Interest is tax deductible }\\hline \end{array} D)  ​ Debt Financing  Dividends are optional ​ Equity Financing  Interest is tax deductible ​​

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option D E) B) and C)
F) None of the above

Question 8

As of November 29,it appears that Notel will report earnings per share (EPS) of $1.15 for the quarter ended November 30.Which of the following events would cause this EPS number to decrease,assuming the event occurs the morning of November 30?

Accepted Answer

A)  The company pays a supplier for inventory bought on account.
B)  The company declares,but does not pay,a cash dividend.
C)  The company purchases 10 shares of common stock in another company.
D)  The company reissues the treasury stock it holds.E) A) and C)
F) A) and D)

Question 9

MacDowell Corp.has 100,000 shares outstanding with a par value of $2.On March 3,it declared a 100% stock dividend,when its stock price was $15.As a result of this stock dividend,retained earnings:

Accepted Answer

A)  decreased by $1,500,000.
B)  decreased by $200,000.
C)  increased by $1,500,000.
D)  increased by $100,000.E) C) and D)
F) B) and D)

Question 10

Which of the following line item amounts would be under the Retained Earnings column of a Statement of Stockholders' Equity?

Accepted Answer

A)  Net Income
B)  Stock Issuances
C)  Additional Paid-in Capital
D)  Treasury StockE) None of the above
F) B) and C)

Question 11

A company originally issues 180,000 shares of stock at a price of $22;one year later the stock price is $40 per share,the number of outstanding shares is unchanged,and the company's net income for the year is $230,400.The P/E ratio at the end of the recent year is:

Accepted Answer

A)  0.0002.
B)  24.22.
C)  31.25.
D)  0.0001.E) None of the above
F) A) and B)

Question 12

What does the par value of a stock represent?

Accepted Answer

A)  The average market value of a stock for the year to date.
B)  It is a legal concept not related to the market value of a stock.
C)  The amount that would be paid if a stock was purchased by the issuing company.
D)  The current market value of a stock.E) All of the above
F) B) and D)

Question 13

Match each term with the appropriate definition.Not all definitions will be used.
-IPO

Accepted Answer

A)  Stock shares that pay a fixed dividend rate but have no voting rights.
B)  The shares of stock held by stockholders.
C)  Stock that allows owners to be listed among creditors.
D)  This payment raises stockholders' equity.
E)  This payment decreases stockholders' equity.F) The shares of stock held by the issuing company.G) Earnings per share that reflects treasury and preferred stock.H) (Net income less preferred dividends) divided by average stockholders' equity.I) This dividend does not reduce stockholders' equity.J) Stockholders' entitlement to remaining assets after creditors are repaid.K) The additional shares of stock a company can issue beyond what are already issued.L) (Net income less preferred dividends) divided by the average number of outstanding common shares.M) When a company first starts selling stock to the public.N) H) and M)
O) F) and G)

Question 14

Ms.Jessica Duffy purchased 1 share of $10 par value common stock from Ohio Corporation for $50 per share.Ms.Duffy sold that share to Mike Truesdale for $60 per share.As a result of the sale by Duffy to Truesdale sale,Ohio Corporation would:

Accepted Answer

A)  debit Cash and credit Additional Paid-in Capital for $10.
B)  debit Cash and credit Common Stock for $10.
C)  debit Common Stock and credit Additional Paid-in Capital for $10.
D)  not debit or credit any of its accounts.E) A) and B)
F) C) and D)

Question 15

A dividend date of record is the date on which the corporation:

Accepted Answer

A)  makes no entry.
B)  records an increase in Dividends Payable.
C)  records a decrease in Dividends Payable.
D)  records an increase in Dividends.E) None of the above
F) A) and C)

Question 16

When does a corporation record an increase in Dividends Payable?

Accepted Answer

A)  On the date of record.
B)  On the date of payment.
C)  On the declaration date.
D)  On the date of issuance.E) B) and C)
F) A) and D)

Question 17

A company that pays no dividends is always a poor investment.

Accepted Answer

A) True 
 B)False

Question 18

If shares of common stock are issued at a market price greater than par value,the amount in excess of par should be credited to:

Accepted Answer

A)  Common Stock.
B)  Treasury Stock.
C)  Retained Earnings.
D)  Additional Paid-in Capital.E) A) and B)
F) B) and D)

Question 19

Common stock's par value is:

Accepted Answer

A)  the same as a bond's par value.
B)  the same as the common stock's market price.
C)  the common stock's average price.
D)  an insignificant amount specified in the corporate charter.E) All of the above
F) A) and B)

Question 20

All of the following are a part of contributed capital except:

Accepted Answer

A)  Common Stock.
B)  Additional Paid-in Capital.
C)  Preferred Stock.
D)  Retained Earnings.E) B) and D)
F) A) and D)

Exam 11: Stockholders Equity

One of the advantages of a partnership is:

Correct Answer
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Columbia Clay,Inc.issues 2 million shares of preferred stock with a par value of $2 at its market price of $26 per share.The issuance should be recorded with a debit to Cash for:

Correct Answer
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Which of the following line item amounts would be under the Retained Earnings column of a Statement of Stockholders' Equity?

Correct Answer
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A company originally issues 180,000 shares of stock at a price of $22;one year later the stock price is $40 per share,the number of outstanding shares is unchanged,and the company's net income for the year is $230,400.The P/E ratio at the end of the recent year is:

Correct Answer
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Ms.Jessica Duffy purchased 1 share of $10 par value common stock from Ohio Corporation for $50 per share.Ms.Duffy sold that share to Mike Truesdale for $60 per share.As a result of the sale by Duffy to Truesdale sale,Ohio Corporation would:

Correct Answer
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A dividend date of record is the date on which the corporation:

Correct Answer
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Match each term with the appropriate definition.Not all definitions will be used. -IPO

Correct Answer
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Correct Answer
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When does a corporation record an increase in Dividends Payable?

Correct Answer
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What does the par value of a stock represent?

Correct Answer
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Common stock's par value is:

Correct Answer
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All of the following are a part of contributed capital except:

Correct Answer
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If shares of common stock are issued at a market price greater than par value,the amount in excess of par should be credited to:

Correct Answer
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The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Correct Answer
verified

Taggart Company has a P/E ratio of 13 in year 2016 and 12.5 in 2017.In 2018,its P/E ratio is 19.5.The best way to interpret these data is to conclude that:

Correct Answer
verified

As of November 29,it appears that Notel will report earnings per share (EPS) of $1.15 for the quarter ended November 30.Which of the following events would cause this EPS number to decrease,assuming the event occurs the morning of November 30?

Correct Answer
verified

MacDowell Corp.has 100,000 shares outstanding with a par value of $2.On March 3,it declared a 100% stock dividend,when its stock price was $15.As a result of this stock dividend,retained earnings:

Correct Answer
verified

A company that pays no dividends is always a poor investment.

Correct Answer
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A stock dividend is considered a large stock dividend if it is than 25% of the outstanding shares,and it is recorded at the value of the additional shares.

Correct Answer
verified

Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.

Correct Answer
verified

Exam 11: Stockholders Equity

One of the advantages of a partnership is:

Correct AnswerverifiedShow Answer

Columbia Clay,Inc.issues 2 million shares of preferred stock with a par value of $2 at its market price of $26 per share.The issuance should be recorded with a debit to Cash for:

Correct AnswerverifiedShow Answer

Which of the following line item amounts would be under the Retained Earnings column of a Statement of Stockholders' Equity?

Correct AnswerverifiedShow Answer

A company originally issues 180,000 shares of stock at a price of $22;one year later the stock price is $40 per share,the number of outstanding shares is unchanged,and the company's net income for the year is $230,400.The P/E ratio at the end of the recent year is:

Correct AnswerverifiedShow Answer

Ms.Jessica Duffy purchased 1 share of $10 par value common stock from Ohio Corporation for $50 per share.Ms.Duffy sold that share to Mike Truesdale for $60 per share.As a result of the sale by Duffy to Truesdale sale,Ohio Corporation would:

Correct AnswerverifiedShow Answer

A dividend date of record is the date on which the corporation:

Correct AnswerverifiedShow Answer

Match each term with the appropriate definition.Not all definitions will be used. -IPO

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When does a corporation record an increase in Dividends Payable?

Correct AnswerverifiedShow Answer

What does the par value of a stock represent?

Correct AnswerverifiedShow Answer

Common stock's par value is:

Correct AnswerverifiedShow Answer

All of the following are a part of contributed capital except:

Correct AnswerverifiedShow Answer

If shares of common stock are issued at a market price greater than par value,the amount in excess of par should be credited to:

Correct AnswerverifiedShow Answer

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

Correct AnswerverifiedShow Answer

Taggart Company has a P/E ratio of 13 in year 2016 and 12.5 in 2017.In 2018,its P/E ratio is 19.5.The best way to interpret these data is to conclude that:

Correct AnswerverifiedShow Answer

As of November 29,it appears that Notel will report earnings per share (EPS) of $1.15 for the quarter ended November 30.Which of the following events would cause this EPS number to decrease,assuming the event occurs the morning of November 30?

Correct AnswerverifiedShow Answer

MacDowell Corp.has 100,000 shares outstanding with a par value of $2.On March 3,it declared a 100% stock dividend,when its stock price was $15.As a result of this stock dividend,retained earnings:

Correct AnswerverifiedShow Answer

A company that pays no dividends is always a poor investment.

Correct AnswerverifiedShow Answer

A stock dividend is considered a large stock dividend if it is ________ than 25% of the outstanding shares,and it is recorded at the ________ value of the additional shares.

Correct AnswerverifiedShow Answer

Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.

Correct AnswerverifiedShow Answer

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A stock dividend is considered a large stock dividend if it is than 25% of the outstanding shares,and it is recorded at the value of the additional shares.

Correct Answer
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Correct Answer
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