Acct - exam 6

Common stockholders usually have all of the following rights except:

To participate in the day-to-day operations.

Under GAAP, which of the following is not correct about the statement of cash flows?

Cash dividends paid are classified as cash flows from operating activities.

Treasury Stock is normally reported as:

A reduction of total stockholders' equity.

If a company issues 1,000 shares of $1 par value common stock for $20 per share, which of the following accounts would be credited?

Additional Paid-in Capital

When treasury stock is resold at a price above cost:

Additional Paid-in Capital is increased.

Which of the following is the potential feature of preferred stock?

All other three choice are potential features of preferred stock.

When treasury stock is acquired (the firm purchase its own stock), what is the effect on assets and stockholders' equity?

Assets and stockholders' equity decrease.

Journal entries to record cash dividends are made on the:

Declaration date and payment date.

Preferred stock is called preferred because it usually has two preferences over common stock. These preferences relate to:

Dividends and distribution of assets if the corporation is dissolved.

The statement of stockholders' equity shows:

How each equity account changed over time.

Price-Earnings Ratio

Indicates how the stock is trading relative to current earnings.

Earnings per Share

Measures net income earned per share of common stock

Return on Equity

Measures the ability of company management to generate earnings from the resources that owners provide

Gross Profit is calculated as:

Net Sales - Cost of Goods Sold

Return on equity is calculated as:

Net income divided by average stockholders' equity.

The statement of cash flows reports cash flows from the activities of:

Operating, investing, and financing.

Issued stock refers to the number of shares

Outstanding plus treasury shares.

Which of the following is NOT an example of aggressive accounting practices?

Recording contingent losses that are probable.

Which of the following accounts is NOT reported in the stockholders' equity section of the balance sheet ?

Sales Revenue

Which of the following is FALSE regarding the accounting for treasury stock? (Please check only one option)

Sell treasure stock above its value generates a gain in income statement

The Statement of Cash Flows:

Shows that the change in total cash from one year to the next is equal to the net operating, investing, and financing cash flows.

Conservative accounting practices are those that result in reporting lower income, lower assets, and higher liabilities.

TRUE

Earnings management is not fraud as long as GAAP is followed.

TRUE

Which of the following business activities is categorized as operating activities on a statement of cash flows?

The company paid salary to its employees totaling $527,000 during the current year.

The stockholders' equity section in the balance sheet shows:

The ending balance in each stockholders' equity account at a time point.

In the operating activities section of the statement of cash flows, we start with net income when using:

The indirect method.

The balance of Retained Earning at the end of the year represents:

Total earnings less payments to owners over the life of the company.

A tract of land valued at $50,000 has been given to a corporation in exchange for 1,000 preferred shares of stock with a par value of $15.

debit $50000 Land, credit $15000 preferred stock, & credit $35000 additional paid-in capital