Accounting GR 4

Identify the formula to compute basic earnings per share.

(Net income - preferred dividends)/weighted-average common shares outstanding

There are five important steps to preparing a statement of cash flows. Rank the steps in order from first to last.

1) compute the net increase or decrease in cash 2 compute net cash from or for op act 3 comp net cash from or for invest act 4 comp net cash fro or for finan act 5 comp the net cash from all sources, then prove it by adding it to beg cash to get end cash

Crystal, Inc. has 500 shares of outstanding $10 par common stock, with a current market value of $20 per share. Earnings per share is $2.00. The price-earnings ratio is

10

Visor, Inc. had net income during the period of $10,000. Preferred dividends were $2,000 and the weighted-average common shares outstanding were 500. Basic earnings per share equal $

16

Peas, Inc. has 1,000 shares of $5 par value common stock outstanding. The annual cash dividend per share was $6.00; market value per share was $30; and net income during the period was $65,000. Dividend yield equals

20

MRC Company reports the following information for the current year: total assets of $65,000 and total cash provided from operations of $20,000; For the previous year: total assets of $75,000 and cash provided from operations of $5,000. Cash flow on total assets for the current year is (round to the nearest tenth):

28.6%

_______ stock is the number of shares that a corporation's charter allows it to sell.

Authorized

_________ stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.

Authorized

Which of the following transactions would not be classified as an operating activity on the statement of cash flows?

Cash dividends paid to shareholders

Which of the following transactions would not be reported under investing activities in the statement of cash flows?

Cash paid for interest on long-term notes

Which of the following items would be reported under financing activities on the statement of cash flows? (Check all that apply.)

Cash paid to repay debt Cash received from issuing notes payable Cash dividends paid to shareholders

Which of the following would not be reported under financing activities on the statement of cash flows?

Cash received from sale of plant assets

The board of directors of Chester, Inc. authorizes a $0.10 cash dividend to its 10,000 shares of common stock issued and outstanding. On the date of payment, a journal entry will debit which of the following accounts and for what amount?

Common Dividend Payable for $1,000.

______ income statements express each item as a percent of a base amount. The base amount is assigned a value of 100%.

Common-size

_______income statements include amounts for two or more periods, placed side by side.

Comparative

Which of the following is not one of the five important steps to preparing a statement of cash flows?

Compute the net income

J. Flores owns a business and is trying to decide whether to incorporate. While researching corporations, she has determined the following facts. Which of these facts is not correct?

Corporations dissolve when owners transfer rights.

Authorizing a cash dividend payment to investors requires three crucial dates. Identify which of the following is not a correct term to describe these dates.

Date of authorization

Gomez Inc.'s charter authorizes 1,000 shares of stock at a par value of $1 per share. Gomez sells 200 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include which of the following entries?

Debit to Cash for $200. Credit to Common Stock, $1 par for $200.

The board of directors of Anchor, Inc. authorizes a $0.50 cash dividend to its 100,000 shares of common stock issued and outstanding. On the date of payment, a journal entry will include which of the following accounts? (Check all that apply.)

Debit to Common Dividend Payable Credit to Cash

Information about cash flows can influence decision makers in important ways. Which of the following questions could be answered by the statement of cash flows? (Check all that apply.)

Does the company have the resources to pursue opportunities? Can the company pay its debts? How does a company spend its cash?

____users of accounting information rely on financial statement analysis to make more informed decisions when pursuing their goals.

External

An advantage of purchasing preferred stock is that preferred shareholders are guaranteed to receive dividend payments each year.

False

Identify the disadvantages of the corporate form of business. (Check all that apply.)

Gov regulation Crop taxation

It is important to analyze the sources and uses of cash because: (Check all that apply.)

Investors use this information to decide if they will purchase their stock. Creditors use this information to assist them in deciding whether to loan funds to them.

Which of the following statements about the statement of cash flows are correct? (Check all that apply.)

It details the sources and uses of cash. The purpose is to report cash receipts and cash payments during a period.

Identify the advantages of the corporate form of business. (Check all that apply.)

Limited liability of stockholders Continuous life Ease of capital accumulation

Identify which of the following is not generally a right of common stockholders.

Manage operations

The market value per share is the price at which stock is bought and sold. Which of the following factors does not influence market value?

Par value

______ has/have special rights that give it priority over other types of stock in one or more areas.

Preferred stock

Which of the following areas are not considered to be one of the building blocks of financial statement analysis?

Ratio analysis

Stockholders' equity, reported on the balance sheet, consists of which of the following accounts? (Check all that apply.)

Retained earnings Paid-in Capital

Rank the following groups in order of authority--with the highest authority at the top.

Stockholders board of directors pres, vice pres, other officers employees

There are several reasons why a board of directors would authorize a stock dividend. Which of the following is not a reason for a stock dividend?

To reduce the par value of the stock

______ analysis is a form of horizontal analysis that can reveal patterns in data across periods. It is computed by taking the (analysis period amount/base period amount) x 100.

Trend

Stockholders do not have the power to bind the corporation to contracts. This is referred to as lack of mutual agency.

True

Which of the following is not a characteristic of a corporation?

Unlimited liability of stockholders

Which of the following questions could not be answered from the statement of cash flows?

What are the earnings-per-share of common stock?

Information on the statement of cash flows helps users answer all of the following questions except:

Why did the company invest in long-term assets?

When stock is sold for less than par value, it is issued at

a discount

The statement of cash flows reports noncash investing and financing transactions in

a note or separate schedule

To prepare common-size financial statements, each line item needs to be calculated to a common-size percent. The formula for common-size percent is (______) x 100.

analysis amount/base amount

Investors assess cash flows before

buying and selling stock

________ is a general term that refers to any shares issued to obtain capital (owner financing).

capital stock

Dean, Inc.'s charter indicates a par value of $1 per share. Dean issues 100 shares at a market value of $8 per share. The journal entry to record this transaction will include a debit to the_______ account in the amount of $______

cash 800

A ______ is the distribution of cash to its owners. This is determined by the board of directors.

cash dividend

The ______ helps measure a company's ability to meet its obligations, pay dividends, expand operations, and obtain financing. It is computed by taking cash flow from operations divided by average total assets.

cash flow on total assets

Darby, Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called_________ stock

common

When all authorized shares of stock have the same rights and characteristics, the stock is called ______ stock.

common

Vertical analysis is also called______-______ analysis

common size

A statement of stockholders' equity lists balances of:

common stock shares retained earnings cash dividends net income

Payton, Inc.'s charter authorized 100,000 shares of stock with a par value of $1 per share. Payton issues 100 shares at a market value of $5 per share. The journal entry to record this transaction will include a credit to ______ in the amount of ______.

common stock, $1 par, $100

______ balance sheets consist of balance sheet amounts from two or more balance sheet dates, arranged side by side.

comparative

Treasury stock is a(n)________equity account, with a normal debit balance. It is reported on the stockholders' equity section of the balance sheet as a reduction to stockholders' equity.

contra

On June 1, the board of directors of Dylan, Inc. declare a cash dividend of $1 per share. On June 1, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a (debit/credit)______to the Common Dividend Payable account.

crebit

Rush, Inc.'s charter authorized 500,000 shares of stock with a par value of $1 per share. Rush issues 10 shares at a market value of $10 per share. The journal entry to record this transaction will include a (debit/credit)_________to the Common Stock, $1 par account in the amount of $_____

credit 10

Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a (debit/credit)________to Common Stock, $1 par for $____

credit 100

On August 20, Max, Inc. issues 100 shares of $1 par value preferred stock for $3,000 cash. The entry to record this transaction would include a (debit/credit)_________ to the preferred stock account in the amount of $____

credit 100

On May 25, Tyler, Inc. issues 100 shares of $10 par value preferred stock for $5,000 cash. The entry to record this transaction would include a (debit/credit) ______ to the preferred stock account in the amount of ______.

credit; $1,000

Stockholders elect the board of

directors

A_________ on stock occurs when a corporation issues its stock for less than par (or stated) value; however, most states prohibit stock to be sold for less than the par (or stated) value.

discount

Trend percent is computed by taking the (analysis period amount ______) x 100

divided by the base period

The board of directors authorizes a cash__________or distribution of cash to its investors.

dividend

Preferred stock usually carries a preference for dividends, meaning that:

dividends are allocated to preferred shareholders before they are issued to common shareholders

Small dollar changes can yield large percent changes consistent with their importance.

false

All of the following are standards used in financial statement analysis for comparisons: (Check all that apply.)

industry intracompany competitor

The purpose of financial statement analysis for (internal/external)______users is to provide information to improve efficiency and effectiveness.

internal

In a statement of cash flows, cash received from the sale of a building would be classified under "cash flows from ________activities."

investing

The format of a statement of cash flows includes reporting cash flows from three activities including: (Check all that apply.)

investing financing operating

Stock dividends are given to

keep the market price of the stock affordable.

The ______ value per share is the price at which a stock is bought and sold.

market

The formula for the price-earnings ratio is_____value per share/earnings per share.

market

The formula to compute dividend yield takes annual cash dividends per share divided by:

market value per share

Jordan Inc.'s charter states that there are 50,000 shares of stock authorized with a par value of $5 per share. This typically means that investors must pay a (minimum/maximum)________of $5 per share to invest in the corporation.

minimum

__________activities include those transactions and events that affect net income.

operating

Philip's Inc. reports stockholders' equity on its financial statements. The two items reported in the stockholders' equity section of Philip's balance sheet are________Capital and Retained Earnings.

paid-in

The ______ value of stock is an amount assigned per share by the corporation in its charter. In many states, this amount establishes the minimum legal capital, which refers to the least amount that the buyers of stock must contribute or be subject to paying at future dates.

par

When the board of directors authorizes a cash dividend to investors, there are three important dates involved—the date of declaration, date of record, and date of______

payment

Stock that typically includes preference for receiving dividends and for distribution of corporate assets during a liquidation is called (common/preferred)_______ _ stock.

preferred

Identify which of the following specific areas are considered the building blocks of financial statement analysis. (Check all that apply.)

profitability market prospects liquidity and efficiency solvency

A charter application usually must be signed by the prospective stockholders called incorporaters or__________ Then, it is filed with the appropriate state official.

promoters

A measurement of key relations between financial statement items is called ______ analysis.

ratio

On March 15, the board of directors of Richmond, Inc. declare a cash dividend of $1 per share. On March 15, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a debit to the ______ account.

retained earnings

The account that consists of a company's cumulative net income less any losses and dividends declared since its inception is called________

retained earnings

____________ ________is an account that consists of a company's cumulative net income less any losses and dividends declared since its inception.

retained earnings

Analysts typically use computation of dollar changes and percent changes because:

sometimes dollar changes are small, but percents are large

A stock ______ is the distribution of additional shares to stockholders according to their percent ownership. When this occurs, the corporation "calls in" its outstanding shares and issues more than one new share in exchange for each old share.

split

Mario, Inc. declares a 2-for-1 stock_______ . This means that Mario will "call in" its outstanding shares and issue two shares in exchange for each old share of stock.

split

The ______ lists the beginning and ending balances of key equity accounts and describes the changes that occur during the period.

statement of stockholders equity

A ______ dividend, declared by a corporation's directors, is a distribution of additional shares of the corporation's own stock.

stock

Capital ______ is a general term that refers to any shares issued to obtain capital (owner financing).

stock

The board of directors of Visor, Inc. authorize a ______, a distribution of additional shares of the corporation's own stock, to existing shareholders

stock dividend

Two of the biggest disadvantages of the corporate form of business are government regulation and corporate

taxation

A corporation is created by obtaining a charter from:

the state government

Keys, Inc. purchased 100 shares of its own common stock for $10 per share. The stock is now classified as ______ stock, a contra equity account, reported on the statement of stockholder's equity.

treasury

Data visualizations reveal:

trends not easily seen by looking at numbers insights not easily seen by looking at numbers

A comparison of a company's financial condition and performance to a base amount, such as total assets, is called (horizontal/vertical) ______analysis.

vertical

Stockholders have the right to ______ at stockholders meetings

vote