Accounting Final
The Dayton Corporation began the current year with a retained earnings balance of $32,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared cash dividends of $7,000. Compute the year end retained earnings balance.
$34,000
What is the total stockholders' equity based on the following account balances? Common Stock$375,000Paid-In Capital in Excess of Par90,000Retained Earnings190,000Treasury Stock15,000
$640,000
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?
$80,000
What is the total stockholders' equity based on the following data? Common Stock$630,000Excess of Issue Price Over Par375,000Retained Earnings (deficit)(65,000)
$940,000
What is the accounting equation?
Assets= liabilities + equity
The entry to record the issuance of common stock at a price above par includes a debit to
Cash
Which of the following is the appropriate general journal entry to record the declaration of a cash dividends?
Cash Dividends Cash Dividends Payable
Which of the following is not characteristic of a corporation?
Cash dividends paid by a corporation are deductible as expenses by the corporation.
Which of the following statements concerning taxation is accurate?
Corporations pay federal and state income taxes.
All of the following are normally found in a corporation's stockholders' equity section except
Dividends in Arrears
Which one of the following would not be considered an advantage of the corporate form of organization?
Government regulation
The excess of sales price of treasury stock over its cost should be credited to
Paid-In Capital from Sale of Treasury Stock
If common stock is issued for an amount greater than par value, the excess should be credited to
Paid-in Capital in Excess of Par Value.
The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?
Retained earnings
When a stock dividend is declared, which of the following accounts is credited?
Stock Dividends Distributable
Which of the following is not true of a corporation?
The acts of its owners bind the corporation.
Which of the following statements is not true about a 2-for-1 split?
Total contributed capital increases.
The par value per share of common stock represents
an arbitrary amount established in the articles of incorporation
Retained earnings
are changes are summarized in the retained earnings statement
How is treasury stock shown on the balance sheet?
as a decrease in stockholders' equity
The state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called
authorized stock
Those most responsible for the major policy decisions of a corporation are the
board of directors.
A disadvantage of the corporate form of business entity is
corporations are subject to more governmental regulations
When Bayou Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 9,000 shares of stock at a price of $23 per share. The entry to record the above transaction would include a
credit to Paid in Capital in Excess of Par for $117,000
The date on which a cash dividend becomes a binding legal obligation is on the
declaration date.
The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to
decrease total assets and stockholders' equity.
Treasury stock should be reported in the financial statements of a corporation as a(n)
deduction from stockholders's equity.
One of the main disadvantages of the corporate form is the
double taxation of dividends
The ability of a corporation to obtain capital is
enhanced because of limited liability and ease of share transferability.
Which of the following would appear as a prior-period adjustment?
error in the computation of depreciation expense in the preceding year
What does the initials GAAP stand for?
generally accepted accounting principles
A restriction/appropriation of retained earnings
has no effect on total retained earnings
The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?
how high the par value is
Stockholders' equity
includes retained earnings and paid-in capital
The authorized stock of a corporation
is indicated in its charter.
Par value
is the monetary value assigned per share in the corporate charter.
Earnings per share
is the net income per common share must be reported by publicly traded companies helps compare companies of different sizes (all of the above)
Treasury stock shares are
issued shares that have been reacquired by a corporation
Which of the following is not a prerequisite to paying a cash dividend?
market value in excess of par value per share
Under the corporate form of business organization
ownership rights are easily transferred.
The excess of issue price over par of common stock is termed a(n)
premium
The primary purpose of a stock split is to
reduce the market price of the stock per share
Characteristics of a corporation include
shareholders who have limited liability
Significant changes in stockholders' equity are reported in
statement of stockholders' equity
The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a
stock split
In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported?
stockholders' equity on balance sheet
The liability for a dividend is recorded on which of the following dates?
the date of declaration
Which of the following amounts should be disclosed in the stockholders' equity section of the balance sheet?
the number of shares of common stock outstanding the number of shares of common stock issued the number of shares of common stock authorized (all of the above)
When a corporation completes a 3-for-1 stock split
the ownership interest of current stockholders is decreased the market price per share of the stock is decreased (b and c)
Which of the following is not a right possessed by common stockholders of a corporation?
the right to receive a minimum amount of dividends
Which statement below is not a reason for a corporation to buy back its own stock.
to increase the shares outstanding
Which of the following is not classified as paid-in capital on the balance sheet?
treasury stock