Financial Accounting II Unit 6 Quiz

Consider the following scenario: Company XYZ has issued 120,000 shares of common stock, 10,000 of which are treasury stock. The company has also issued 5,000 shares of 6%, $50 par, preferred stock. If the company has declared $75,000 in dividends, how much will preferred stockholders receive? Cannot be determined with the information provided. $15,000 $3,125 $3,409

$15,000

Company XYZ has issued 120,000 shares of common stock, 10,000 of which are treasury stock. You own 5,000 shares of stock in XYZ and total stockholder's equity is $350,000. How much equity do you have in the company? (Round all intermediate calculations three decimal places) $14,350 $14,600 $15,750 Cannot be determined with the information provided.

$15,750

Company XYZ has issued 120,000 shares of common stock, 10,000 of which are treasury stock. If you own 5,000 shares of stock in XYZ, what is your percentage of ownership in the company's capital? 4 ½ % 45% 41% Cannot be determined with data provided.

4 ½ %

Which of the following statements most accurately describes cumulative stock? A form of common stock in which the fixed dividend rate accumulates over time, if not paid. A form of preferred stock in which the market value grows cumulatively, over time. Any share of stock that accumulates additional value, over time. A form of preferred stock in which the fixed dividend obligation accumulates, if not paid.

A form of preferred stock in which the fixed dividend obligation accumulates, if not paid.

Which of the following statements most accurately describes non-cumulative stock? A form of common stock in which the fixed dividend obligation does not accumulate, if not paid. A form of preferred stock in which the fixed dividend obligation does not accumulate, or accrue, if not paid. Any share of stock that does not appreciate, or grow in value over time. A form of preferred stock in which the market value decreases, over time.

A form of preferred stock in which the fixed dividend obligation does not accumulate, or accrue, if not paid.

Stock splits will not: Affect total stockholder's equity. Increase the number of outstanding shares. Reduce the par value of stock. Increase the number of shares of stock on which dividends will be paid.

Affect total stockholder's equity.

All of the following accurately describe common stock except: Carries a fixed dividend rate. Carries voting rights. Represents ownership in corporate capital. Is not typically issued at par value.

Carries a fixed dividend rate.

All of the following accurately describe preferred stock except: Carries a fixed dividend rate. Receives preference in distribution of dividends and/or distribution of assets upon liquidation. Carries voting rights. Is typically issued at par value.

Carries voting rights.

All of the following accurately discuss how cash dividends are determined except: Any preferred dividend obligation is considered first, before allocating remaining dividend available to common stockholders. Preferred stockholders are paid based on a fixed dividend rate. Common stockholder dividends are determined based on the number of shares held. Common stockholder dividends are paid based on a fixed dividend rate.

Common stockholder dividends are paid based on a fixed dividend rate.

Which of the following is not a part of the dividends process? Dividends are declared by board of directors. Dividends are recorded as a liability to the stockholders. Dividends are determined based on total stockholder's equity. Dividends are distributed based on shares of stock.

Dividends are determined based on total stockholder's equity.

Which of the following statements about cash dividends is inaccurate? Dividends are issued to common stockholders based on shares held. Dividends are issued to preferred stockholders based on a fixed dividend rate. Dividends are paid from contributed capital/stock accounts. Dividends are paid from earned capital/retained earnings.

Dividends are paid from contributed capital/stock accounts.

Consider the following scenario: Company XYZ has issued 120,000 shares of common stock, 10,000 of which are treasury stock. The company has also issued 5,000 shares of 6%, $50 par, preferred stock. If the company has declared $75,000 in dividends, how much in dividends per share will common stockholders receive? (Round answer two decimal places) $54.00 per share Each stockholder will receive $0.54 in dividends for each share held. Each stockholder will receive $0.68 in dividends for each share held. Cannot be determined with the information provided.

Each stockholder will receive $0.54 in dividends for each share held.

Which of the following statements about outstanding stock is not true? Represents shares held by stockholders. Includes treasury stock. Represents 100% ownership in corporate capital. Is the difference between total shares issued less any shares in treasury stock.

Includes treasury stock.

Which of the following statements about par value is true? Directly tied to market value of stock. Directly tied to issue price of stock. Determines amount of dividends that will be paid on common stock. Is a nominal, arbitrary amount applied to shares of stock; unrelated to actual stock value or price.

Is a nominal, arbitrary amount applied to shares of stock; unrelated to actual stock value or price.

All of the following accurately describe the common stock account except... Is the source for distribution and payment of dividends. Represents the portion of equity generated through issuance of stock. Is a contributed form of capital. Is added to Retained Earnings to determine Total Stockholder's Equity.

Is the source for distribution and payment of dividends.

How are stock splits recorded? Retained earnings is decreased, and common stock is increased based on par value. Retained earnings is decreased, and common stock is increased based on market value. No entry is required for a stock split. Common stock receives an adjusting entry based on number of additional shares.

No entry is required for a stock split.

Where are dividends reported? On the income statement. On the balance sheet. On the statement of retained earnings. On the statement of retained earnings and on the balance sheet.

On the statement of retained earnings.

The characteristics of a corporate structure would not include: Owners are liable for business debt obligations. Recognized as a separate legal entity of the state. Earnings are subject to double taxation. Owners are referred to as stockholders.

Owners are liable for business debt obligations.

When recording for issuance of stock, all of the following accurately describe this process except: Different classes of stock are recorded in separate stock accounts Par value is recorded separately from the premium on stock issuance Premium on stock issuance is recognized as income/profit. Cash and total stockholder's equity will both increase as a result of this transaction.

Premium on stock issuance is recognized as income/profit.

Which of the following does not accurately describe Total Stockholder's Equity? Represents the portion of business assets not claimed by creditors. Represents the value of ownership for stockholders. Includes common stock and retained earnings. Represents how much capital has been generated through issuance of stock.

Represents how much capital has been generated through issuance of stock.

All of the following accurately describe retained earnings except... The portion of total equity that is earned through profitable operations. The accumulation of undistributed net income. The portion of equity that is generated through issuing stock. The portion of equity from which dividends are distributed/paid.

The portion of equity that is generated through issuing stock.

Which of the following statements accurately describes the affect of treasury stock on total stockholder's equity? Treasury stock does not affect equity because treasury stock carries no claim to equity. Treasury stock decreases total stockholder's equity. Is included with common stockholder shares in determining ownership in corporate capital. Is not included in common stock shares issued, so does not affect equity.

Treasury stock decreases total stockholder's equity.

Which of the following statements about treasury stock is not accurate? Treasury stock represents ownership in corporate capital. A company may buy back shares of stock and hold them in treasury as a way to allow investors to gain some cash back from their investment. A company may hold shares of stock in treasury to ensure enough shares of stock are not available for trade on the market to avoid a takeover. A company may buy back shares of stock to decrease outstanding shares, thus increase earnings per share.

Treasury stock represents ownership in corporate capital.

Which of the following statements about stock dividends is inaccurate? Stock dividends will increase the number of issued and outstanding shares. May dilute market value depending on the size of the stock dividend issued. Size of stock dividend issued may require reporting at different values. Will result in an overall decrease in stockholder's equity.

Will result in an overall decrease in stockholder's equity.

Dividends in a corporation play a similar role to _____________in the partnership and proprietorship structures. owner withdrawals net income owner/partner salaries None of the above

owner withdrawals