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