ACC2201 chapter 10 HW

False but the value per share typically will be reduced by half.

A company with 10,000 shares outstanding declares a 2-for-1 stock split. After the stock split, the company has 5,000 shares outstanding. True or False

c. board of directors a. company president=> CEO b. state in which the corporation operates=> the state where the company was registered d. primary stockholder=> owner of coportaion

A corporation's officers are appointed by the: a. company president b. state in which the corporation operates c. board of directors d. primary stockholder

c. the company paid $0.05 in cash dividends for each $1 invested in its stock.

A dividend yield of 5.0% indicates that: a. the company paid $1 in cash dividends for each $0.05 invested in its stock. b. the company generated $0.05 in net income for each $1 of stockholders' equity. c. the company paid $0.05 in cash dividends for each $1 invested in its stock. d. the company has $0.05 in stockholders' equity for each $1 generated in net income.

b. 25% If a corporation issues less than 25 percent of the total amount of the number of previously outstanding shares as a dividend, this is considered a small stock dividend.

A small stock dividend encompasses less than ______ of the outstanding stock. a. 20% b. 25% c. 5% d. 50%

b. Additional Paid-in Capital common stock + retained earnings net income - dividends an increase in the paid-in capital sub-account and a reduction of retained earnings. The total stockholder equity remains unchanged.

All of the following accounts are directly or indirectly affected by a large stock dividend except _____ a. Common Stock b. Additional Paid-in Capital c. Stock Dividends d. Retained Earnings

a. notes payable treasury stock: issued stock but no dividend and purchased own stock (decrease SE) retained earnings: net income (revenue-expense) - dividend paid in capital: the total amount of cash that a company has received in exchange for its common or preferred stock issues

All of the following are components of stockholders' equity, except ____________. a. notes payable b. paid-in-capital c. retained earnings d. treasury stock

False Private companies may issue stock and have shareholders, but their shares do not trade on public exchanges and are not issued through an IPO. Securities and Exchange Commission: improved oversight to the securities market.

All privately held corporations are regulated by the Securities and Exchange Commission. True or False

d. debit to Treasury Stock for $100,000 When a corporation repurchases its own stock increases (debits) Treasury Stock 100,000k/decreases (credits) Cash 100,000 (= 10,000 shares × $10 per share).

Almond Corporation acquires 10,000 shares of its own $1 par value common stock at $10 per share. The journal entry for this transaction includes a: a. debit to Common Stock for $100,000 b. debit to Common Stock for $10,000 c. debit to Treasury Stock for $10,000 d. debit to Treasury Stock for $100,000

a. credit to Additional Paid-in Capital for $20,000 debit Cash for $120,000 (10,000× $12) /credit Treasury Stock for $100,000 (10,000× $10), Additional Paid-in Capital $20,000. acquires=> repurchase => treasury stock/cash

Delta Corporation acquires 10,000 shares of its own $0.01 par value common stock at $10 per share. It later resells the 10,000 shares of treasury stock for $12. The entry to record this transaction will involve a: a. credit to Additional Paid-in Capital for $20,000 b. credit to Treasury Stock for $120,000 c. debit to Cash for $100,000 d. credit to Common Stock for $100

True 支払われる配当金は、各株主の所有株式の割合に応じて配分されます。

Dividends paid are allocated according to the percentage of shares owned by each stockholder. True or False

c. retained earnings

Earnings not distributed as dividends to stockholders is known as: a. common stock b. treasury stock c. retained earnings d. paid-in capital

False It helps compare the performance of promising companies to help pick the most suitable investment option

Earnings per share is most useful in comparing earnings performance of one company with another. True or False

b. Redeemable c. Cumulative

EyeCare Corporation issued 10,000 shares of 7%, $100 par value preferred stock at the beginning of Year 1. The company did not pay dividends in Year 1. However, preferred stockholders received dividends for Year 1 and Year 2, when the company declared dividends in Year 2. Preferred stockholders also have the option, under specified conditions, to return their shares for a predetermined price. Which of the following features are in present the preferred stock issued by EyeCare?Select all answers that apply to this question. a. Convertible b. Redeemable c. Cumulative d. Noncumulative

b. increases assets and increases stockholders' equity. Cash (A+)/Common Stock (SE+)

Fairfield Corporation issues 100,000 shares of $1 par value common stock for $10 per share. This transaction: a. increases assets and decreases liabilities. b. increases assets and increases stockholders' equity. c. increases assets and decreases stockholders' equity. d. increases assets and increases liabilities.

b. A credit to Additional Paid-in Capital for $10,000 1000*60=60000 1000*50=50000 cash 60000/preferred stock 50000, additional paid in capital 10000

Innovative Media issues 1,000 shares of 8%, $50 par value preferred stock for $60 per share. Which of the following will be recorded at the time of the issue? a. A debit to Cash for $50,000 b. A credit to Additional Paid-in Capital for $10,000 c. A credit to Preferred Stock for $10,000 d. A credit to Preferred Stock for $60,000

d. $160,000 Annual preferred dividends total $80,000 (= 10,000 shares x 8% x $100) $80,000*2=160000 preferred stockholders will receive $160,000

Lego, Incorporated, issued common stock in Year 1. It issued 10,000 shares of 8%, $100 par value cumulative preferred stock for $110 per share at the beginning of Year 4. It did not pay any dividends during Year 4. In December of Year 5, it declares total dividends of $200,000. How much will the preferred stockholders of Lego receive as dividends in Year 5? a. $40,000 b. $200,000 c. $80,000 d. $160,000

c. credit to Additional Paid-in Capital

Marina, Incorporated, acquires 1 million shares of its own $1 par value common stock at $70 per share. It later resells the 1 million shares of treasury stock for $75. We record the $5 difference per share as a: a. revenue in the income statement b. credit to Common Stock c. credit to Additional Paid-in Capital d. gain in the income statement

d. $150,000 preferred stock is noncumulative, preferred stockholders receive only the annual dividend of $100,000 (= 10,000 shares x 10% x $100). 250000-100000=150000 Common stockholders will receive the remaining $150,000.

Marine Corporation issued common stock in Year 1. It issued 10,000 shares of 10%, $100 par value noncumulative preferred stock for $110 per share at the beginning of Year 3. It did not pay any dividends in Year 3 or Year 4. In December of Year 5, it declares total dividends of $250,000. How much will the common stockholders of Marine Corporation receive as dividends in Year 5? a. $100,000 b. $50,000 c. $250,000 d. $150,000

Cash 20,000/Common Stock 1000, Additional Paid in Capital 19000

On January 1, Year 1, Davidson Corporation issues 1,000 shares of $1 par value common stock for $20 per share. Complete the necessary journal entry for the issuance of common stock

a. $110,000 total paid-in capital: paid-in capital + common stock + preferred stock Total paid-in capital as of December 31, Year 3 is $110,000 (common stock of $1,000 + preferred stock of $10,000 + additional paid-in capital of $99,000).

On January 1, Year 3, Boxwood, Incorporated issues 1,000 shares of $1 par value common stock for $30 per share. Later that year, the company issues 1,000 shares of $10 par value preferred stock for $80 per share. The company's balance sheet as of December 31, Year 3, will show total paid-in capital of: a. $110,000 b. $11,000 c. $30,000 d. $99,000

c. debit Dividends (credit dividend payable)

On the date of declaration of the dividend, we _____. a. debit Dividends Payable b. credit Cash c. debit Dividends d. credit Retained Earnings

True

Preferred stock is "preferred" to common stock in two ways: (1) preferred stockholders have first rights to dividends, and (2) in the event the company is dissolved, preferred stockholders receive preference over common stockholders in the distribution of assets. True or False

b. the amount of income generated for each $1 of stockholders' equity.

Return on equity measures: a. the amount of stockholders' equity for each $1 of assets. b. the amount of income generated for each $1 of stockholders' equity. c. the amount of income generated for each $1 of assets. d. the amount of stockholders' equity for each $1 of income.

b. 33.33% ROE = $50 ÷ [($140 + $160)/2] = 33.33%.

Summers, Incorporated, has net income of $50 million in the current year. Stockholders' equity at the beginning and the end of the current year totaled $140 million and $160 million respectively. Total assets at the beginning and the end of the current year totaled $190 million and $210 million respectively. What is the company's return on equity for the current year? a. 31.25% b. 33.33% c. 25.00% d. 23.80%

False additional paid-in capital increase

The Common Stock account increases when treasury stock is resold for more than its original cost. True or False

a. reduction in both stockholders' equity and assets Dividends (SE-)/Cash (A-)

What is the net effect of a dividend declaration and payment? a. reduction in both stockholders' equity and assets b. increase in liabilities and decrease in stockholders' equity c. reduction in both liabilities and assets d. increase in both liabilities and stockholders' equity

a. debit to Treasury Stock for cost

When a corporation acquires shares of its own common stock, it records a: a. debit to Treasury Stock for cost b. debit to Common Stock for cost c. debit to Common Stock for par value d. debit to Treasury Stock for par value

d. initial public offering

When a corporation issues stock to(capital stock) the general public for the first time, it is known as a(n): a. secondary public offering b. integrated primary offering c. seasoned equity offering d. initial public offering (IPO)

True

When a portion of a company's earnings is used to buy back treasury shares, the action decreases stockholders' equity. True or False

True 一般的な個人事業主と法人を比較した場合、資産や収益が大きい事業形態は法人です。

When comparing the typical sole proprietorship and corporation, the form of business having higher assets and earnings is the corporation. True or False

a. 2.5% Dividend yield = $1.20/$48.00 = 2.5%.

Clary Corporation reports dividends per share of $1.20 and net income for the year of $120,000. The current stock price is $48.00. What is the company's dividend yield? a. 2.5% b. 1.0% c. 4.8% d. 10.0%

c. $300,000 because common stock + additional paid-in capital = cash (so just calculate cash and subtract dividends) Total stockholders' equity at the end of Year 1 is $300,000 [= (40,000 × $8) + $60,000 − $30,000 − (5,000 × $10)].

Cole Corporation was organized on January 1, Year 1. The company was authorized to issue 100,000 shares of $1 par value common stock. During the year, the company had the following transactions relating to stockholders' equity: Issued 40,000 shares of common stock at $8 per share. Reported a net income of $60,000. Paid dividends of $30,000. Purchased 5,000 shares of treasury stock at $10 per share. What is total stockholders' equity at the end of Year 1? a. $400,000 b. $350,000 c. $300,000 d. $460,000

False owner=> family and angel investors/venture capital => IPO is usually the last stage of equity financing.

Companies usually rely on angel investors and venture capital firms following an initial public offering. True or False

True

For a profitable company that pays little in dividends, the balance in retained earnings will increase over time True or False

c. $16.00 The company's earnings per share is $3.50 (= $140,000/40,000). Therefore, its price-earnings ratio is $16.00 (= $56.00/$3.50).

For the current year, Fitch Company generates net income of $140,000. The company has 40,000 shares of common stock outstanding, and the stock is currently trading at $56 per share. What is the company's price-earnings ratio? a. $3.50 b. $6.25 c. $16.00 d. $2.50

a. Limited liability b. Ability to raise capital

Identify the primary advantages of the corporate form of business compared to a sole proprietorship or partnership.(multiple choice) a. Limited liability b. Ability to raise capital c. Lower taxes d. Less paperwork e. Ease of incorporation

b. Double taxation d. More paperwork

Identify the primary disadvantages of the corporate form of business compared to a sole proprietorship or partnership. a. Ownership limitations b. Double taxation c. Personal liability d. More paperwork

False because retained earning is SE and normal balance is credit=> negative retained earning=> debit

If losses exceed income since the company began operations, Retained Earnings will have a credit balance. True or False

False

In the stockholders' equity section of the balance sheet, common stock is listed before preferred stock. True or False

a. Retained Earnings

The Stock Dividends account is a temporary stockholders' equity account that is closed into ______. a. Retained Earnings b. Net Income c. Dividends d. Common Stock

True

The balance in retained earnings equals all net income, less all dividends, since the company began operations. True or False

False an initial public offering, or IPO (first time a company offers its shares of capital stock to the general public)

The general public is entitled to invest in a privately held corporation. True or False

b. credit to Additional Paid-in Capital for $198,000 debit Stock Dividends $200,000/credit Common Stock $2,000, Additional Paid-in Capital $198,000 (difference)

The market value of Kennedy Corporation's common stock is $100 per share when it declares a 20% stock dividend on its 10,000 shares outstanding of $1 par value common stock. The entry to record this small stock dividend involves a _____. a. debit to Cash for $200,000 b. credit to Additional Paid-in Capital for $198,000 c. debit to Stock Dividends for $2,000 d. credit to Common Stock for $200,000

a. Convertible d. Noncumulative

The shares of preferred stock issued by Saturn Corporation can be exchanged for common stock. However, any dividends in arrears are lost. Which of the following features are present in the preferred stock issued by Saturn?Select all answers that apply to this question. a. Convertible b. Redeemable c. Cumulative d. Noncumulative

True

The statement of stockholders' equity summarizes the changes in the balance in each stockholders' equity account over a period of time True or False

a. Additional Paid-in Capital c. Common Stock e. Preferred Stock f. Retained Earnings e. Treasury Stock

The stockholders' equity section of the balance sheet includes which of the following accounts?Select all answers that apply to this question. a. Additional Paid-in Capital b. Bonds Payable c. Common Stock d. Notes Payable e. Preferred Stock f. Retained Earnings e. Treasury Stock

False There is no relationship between the par value and market value of common stock. One stock may have a par value of $0.01 per share and a market value of $100 per share, while another stock may have a par value of $1 per share and a market value of $10 per share.

There is a direct relationship between the par value and market value of common stock: stocks with a low par value have a low market value, while stocks with a high par value have a high market value. True or False

True There is no change in total assets, total liabilities, or total stockholders' equity when a small stock dividend, a large stock dividend, or a stock split occurs. Both types of stock dividends impact the accounts in stockholders' equity. A stock split causes no change in any of the accounts within stockholders' equity.

Total assets, total liabilities, and total stockholders' equity do not change as a result of a large stock dividend. True or False

False those that tend to trade at a lower price relative to their fundamentals (including dividends, earnings, and sales). Value stocks generally have good fundamentals, but they may have fallen out of favor in the market and are considered bargain priced compared with their competitors.

Value stocks are stocks that are priced high in relation to current earnings True or False

c. Record date The date of record determines which shareholders will receive the dividends. There is no journal entry recorded. The date of payment is the third important date related to dividends.

Which of the following dates associated with dividends does not require an entry to be recorded? a. Payment date b. Declaration date c. Record date

b. Net income minus dividends on preferred stock

Which of the following is the complete description of the numerator in the equation used to calculate earnings per share? a. Net income b. Net income minus dividends on preferred stock c. Net income minus dividends on common stock d. Net income minus total dividends

c. To avoid changing the par value per share ほとんどの企業が株式分割を株式の多額の配当と同じように報告するのはなぜですか? 一株当たりの額面金額の変更を避けるため

Why do most companies report stock splits in the same way as a large stock dividend? a. To boost earnings per share and other key ratios b. To avoid recording a transaction c. To avoid changing the par value per share d. To increase stock prices