Question 1

A debit balance in the Retained Earnings account indicates a deficit in Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 2

A 2-for-1 stock split will decrease total assets.

Accepted Answer

A) True 
 B)False

Question 3

Xanadu Manufacturing Company has total stockholders' equity of $22 billion. Retained Earnings is $24 billion. How can total stockholders' equity be less than Retained Earnings?

Accepted Answer

A)  Because Retained Earnings is a deficit.
B)  Because the company is going out of business.
C)  Because the company has a large amount of paid-in capital.
D)  Because the company has a large amount of treasury stock.E) A) and C)
F) A) and D)

Question 4

Only stockholders holding stock on the record date will receive a dividend.

Accepted Answer

A) True 
 B)False

Question 5

The purchase of treasury stock decreases the number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 6

The Statement of Stockholders' Equity does NOT include:

Accepted Answer

A)  Retained Earnings.
B)  Accumulated Other Comprehensive Income.
C)  Treasury Stock.
D)  Equity-Method Investments.E) All of the above
F) None of the above

Question 7

The chairperson of the board of directors often has the title of:

Accepted Answer

A)  Chief Financial Officer (CFO) .
B)  President.
C)  Chief Executive Officer (CEO) .
D)  Chief Operating Officer (COO) .E) B) and C)
F) C) and D)

Question 8

Smith Corporation purchases 10,000 shares of its own $20 par value common stock for $30 per share. What will be the effect on stockholders' equity?

Accepted Answer

A)  increase $200,000
B)  decrease $200,000
C)  increase $300,000
D)  decrease $300,000E) A) and C)
F) None of the above

Question 9

Where are stock dividends reported on the statement of cash flows?

Accepted Answer

A)  do not appear anywhere in the statement of cash flows
B)  operating activities section
C)  financing activities section
D)  investing activities sectionE) A) and B)
F) A) and C)

Question 10

A stock split:

Accepted Answer

A)  increases assets and decreases stockholders' equity.
B)  decreases assets and increases stockholders' equity.
C)  increases assets and stockholders' equity.
D)  has no effect on total stockholders' equity.E) A) and B)
F) None of the above

Question 11

The payment of dividends will be reported on the statement of cash flows as a:

Accepted Answer

A)  positive amount in the investing activities section.
B)  negative amount in the investing activities section.
C)  positive amount in the financing activities section.
D)  negative amount in the financing activities section.E) B) and C)
F) C) and D)

Question 12

A company can issue common stock in exchange for assets other than cash.

Accepted Answer

A) True 
 B)False

Question 13

The arbitrary amount assigned by a company to a share of its stock is the:

Accepted Answer

A)  stated value per share.
B)  par value per share.
C)  book value per share.
D)  A and BE) A) and B)
F) A) and C)

Question 14

On December 31, 2017, Pilozzi Company has the following information available:  On December 31, 2017, can the Board of Directors declare a cash dividend of $8 million?

Accepted Answer

A)  Yes, if they can borrow some money, or liquidate some assets.
B)  No, the cash balance is below $8 million.
C)  No, Retained Earnings is below $8 million.
D)  No, Cash and Retained Earnings are both below $8 million.E) A) and D)
F) A) and C)

Question 15

Lewandowski Company reports the following information at the fiscal year end of December 31, 2017:  What is the total paid-in capital for this company at December 31, 2017?

Accepted Answer

A)  $98 million
B)  $498 million
C)  $998 million
D)  $1398 millionE) A) and D)
F) A) and C)

Question 16

On December 31, Sulfur Corporation has the following data available:  What is return on common equity? (Round your final answer to two decimal places, X.XX%.)

Accepted Answer

A)  21.95%
B)  50.70%
C)  45.07%
D)  56.34%E) B) and D)
F) B) and C)

Question 17

Return on equity:

Accepted Answer

A)  shows the relationship between net income and net assets.
B)  is computed for both common and preferred stock.
C)  is a standard measure used to compare companies of different sizes.
D)  is computed by dividing net income plus preferred dividends by average common stockholders' equity.E) C) and D)
F) None of the above

Question 18

The Statement of Stockholders' Equity includes:

Accepted Answer

A)  each revenue and expense account.
B)  each asset account.
C)  each liability account.
D)  each stockholders' equity account.E) A) and B)
F) All of the above

Question 19

Marvin Corporation has the following information reported on the balance sheet as of December 31, 2017:  Based on the information above, how many shares of common stock are outstanding?

Accepted Answer

A)  40,000
B)  5000
C)  1000
D)  4000E) B) and C)
F) C) and D)

Question 20

The journal entry to record common stock issued at its par value includes a credit to:

Accepted Answer

A)  Paid-in Capital-Par Value.
B)  Common Stock.
C)  Common Stock Revenue.
D)  Retained EarningsE) A) and D)
F) B) and D)

Exam 10: Stockholders Equity

Return on equity:

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The arbitrary amount assigned by a company to a share of its stock is the:

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Marvin Corporation has the following information reported on the balance sheet as of December 31, 2017: Based on the information above, how many shares of common stock are outstanding?

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A stock split:

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Only stockholders holding stock on the record date will receive a dividend.

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A 2-for-1 stock split will decrease total assets.

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Xanadu Manufacturing Company has total stockholders' equity of $22 billion. Retained Earnings is $24 billion. How can total stockholders' equity be less than Retained Earnings?

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A debit balance in the Retained Earnings account indicates a deficit in Retained Earnings.

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The Statement of Stockholders' Equity does NOT include:

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A company can issue common stock in exchange for assets other than cash.

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The journal entry to record common stock issued at its par value includes a credit to:

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The payment of dividends will be reported on the statement of cash flows as a:

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Lewandowski Company reports the following information at the fiscal year end of December 31, 2017: What is the total paid-in capital for this company at December 31, 2017?

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Where are stock dividends reported on the statement of cash flows?

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The purchase of treasury stock decreases the number of shares outstanding.

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On December 31, Sulfur Corporation has the following data available: What is return on common equity? (Round your final answer to two decimal places, X.XX%.)

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The Statement of Stockholders' Equity includes:

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Smith Corporation purchases 10,000 shares of its own $20 par value common stock for $30 per share. What will be the effect on stockholders' equity?

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On December 31, 2017, Pilozzi Company has the following information available: On December 31, 2017, can the Board of Directors declare a cash dividend of $8 million?

Correct AnswerverifiedShow Answer

The chairperson of the board of directors often has the title of:

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