Acc 312 Exam 3 - Stockholders Equity

The issuer of a 5% common stock dividend to common stockholders should transfer from retained earnings to paid-in capital an amount equal to the a) fair value of the shares issued b) books value of the shares issued c) minimum legal requirements d) par or stated value of the shares issued

A

How should a "gain" from the sale of treasury stock be reflected in financial statements when using the cost method of recording treasury stock transactions? a) as an unrealized holding gain on the income statement b) as paid-in capital from treasury stock transactions c) as an increase in the amount credited to common stock d) as an other revenue and gain shown on the income statement

B

Dividends are not paid on a) noncumulative preferred stock b) nonparticipating preferred stock c) treasury common stock d) cumulative preferred stock

C

Stockholders' equity is generally classified into two major categories a) contributed capital and appropriated capital b) appropriated capital and retained earnings c) retained earnings and unappropriated capital d) earned capital and contributed capitial

D

On May 1, 2018, Ziek Corp. declared and issued a 10% common stock dividend. Prior to this dividend, Ziek had 200,000 shares of $1 par value common stock issued and outstanding. The fair value of Ziek's common stock was $25 per share on May 1, 2018. As a result of this stock dividend, Ziek's total stockholders' equity a) Increased by $500,000 b) Decreased by $500,000 c) Decreased by $25,000 D) Did not change

D

Assume common stock is the only class of stock outstanding in the Manley Corporation.Total stockholders' equity divided by the number of common stock shares outstanding is called a. book value per share. b. par value per share. c. stated value per share. d. fair value per share.

A

Hernandez Company has 560,000 shares of $10 par value common stock outstanding. During the year, Hernandez declared a 15% stock dividend when the market price of the stock was $30 per share. Four months later Hernandez declared a $0.50 per share cash dividend. As a result of the dividend declared during the year, retained earnings decreased by a) $2,842,000 b) $1,260,000 c) $462,000 d) $420,000

A

In January 2017, finley corporation, a newly formed company, issued 10,000 shares of its $10 par common stock for $15 per share. On July 1, 2017, finley corporation reacquired 1,000 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares a) decreased total stockholders' equity b) increased total stockholders' equity c) did not change total stockholders' equity d) decreased the number of issued shares

A

The rate of return on common stockholders' equity is calculated by dividing a) net income less preferred dividends by average common stockholders' equity b) Net income by average common stockholders' equity c) net income less preferred dividends by ending common stockholders' equity d) net income by ending common stockholders' equity

A

Which of the following represents the total number of shares that a corporation may issue under the terms of its charter? a) authorized shares b) issued shares c) unissued shares d) outstanding shares

A

Which of the following features of preferred stock makes it more like a debt than a equity instrument? a) participating b) voting c) redeemable d) noncumulative

C

Total stockholders' equity represents a) a claim to specific assets contributed by the owners. b) the maximum amount that can be borrowed by the enterprise. c) a claim against a portion of the total assets of an enterprise. d) only the amount of earnings that have been retained in the business.

C

How should cumulative preferred dividends in arrears be shown in a corporation's balance sheet? a. Note disclosure b. Increase in stockholders' equity c. Increase in current liabilities d. Increase in current liabilities for the amount expected to be declared within the year or operating cycle, and increase in long-term liabilities for the balance

A

Quirk Corporation issued a 100% stock dividend of its common stock which had a par value of $10 before and after the dividend. At what amount should retained earnings be capitalized for the additional shares issued? a. There should be no capitalization of retained earnings. b. Par value c. Fair value on the declaration date d. Fair value on the payment date

B

The cumulative feature of preferred stock a. limits the amount of cumulative dividends to the par value of the preferred stock. b. requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders. c. means that the shareholder can accumulate preferred stock until it is equal to the par value of common stock at which time it can be converted into common stock. d. enables a preferred stockholder to accumulate dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.

B

The declaration and issuance of a stock dividend larger than 25% of the shares previously outstanding a. increases common stock outstanding and increases total stockholders' equity. b. decreases retained earnings but does not change total stockholders' equity. c. may increase or decrease paid-in capital in excess of par but does not change total stockholders' equity. d. increases retained earnings and increases total stockholders' equity.

B

The preemptive right of a common stockholder is the right to a) share proportionately in corporate assets upon liquidation b) share proportionately in any new issues of stock of the same class c) receive cash dividends before they are distributed to preferred stockholders d) exclude preferred stockholders from voting rights

B

Which dividends do not reduce stockholders' equity? a. Cash dividends b. Stock dividends c. Property dividends d. All of the above reduce stockholders' equity

B

Written, Inc. has outstanding 600,000 shares of $2 par common stock and 120,000 shares of no-par 6% preferred stock with a stated value of $5. The preferred stock is cumulative and nonparticipating. Dividends have been paid in every year except the past two years and the current year. Assuming that $225,000 will be distributed as a dividend in the current year, how much will the preferred stockholders receive? a) zero b) $117,000 c) $153,000 d) $189,000

B

Common stockholders of a business enterprise are said to be the residual owners. The term residual owner means that shareholders a) are entitled to a dividend every year in which the business earns a profit b) have the rights to specific assets of the business c) bear the ultimate risks and uncertainties and receive the benefits of enterprise ownership d) can negotiate individual contracts on behalf of the enterprise

C