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Exam 11: Stockholders Equity

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Question 91

Multiple Choice

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When a company wishes to purchase and retire its own stock, the company must

A) decrease the stock account balances by the original issue price.
B) record a gain or loss depending on the difference between original selling price and repurchase cost.
C) get the approval of the state to do so.
D) issue a different class of stock to the former stockholders.

E) A) and B)
F) C) and D)

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Question 92

Multiple Choice

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Select the letter of the term each statement best describes. -The number of shares issued less the number of shares held as treasury stock.

A) authorized shares
B) issued shares
C) outstanding shares
D) par value
E) additional paid-in capital
F) retained earnings
G) cumulative feature
H) participating feature
I) callable stock
J) treasury stock
K) retirement of stock
L) dividend payout ratio
M) stock dividend
N) stock split
O) market value per share
P) convertible stock
Q) book value per share

R) D) and I)
S) C) and H)

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Question 93

Multiple Choice

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A liability for dividends is created

Which of the following transactions has an effect on the statement of cash flows?

Which of the following is reported as a financing activity?

Select the best answer from the list below to complete statements 1-11 that follow. -Net income that has been earned by the corporation but not paid out as dividends are ______________________________.

At December 31, 2015, North Company and South Company have identical amounts of common stock and retained earnings as follows: Common Stock, $10 par, 50,000 shares authorized, 9,000 issued, 9,000 outstanding Retained Earnings, $500,000 At December 31, 2015, North Company declares and issues a 100% stock dividend, while South Company declares and issues a 2-for-1 stock split. REQUIRED: Determine for each company the following amounts as of January 1, 2016: Number of shares of common stock outstanding Par value per share of the common stock Total amount reported in Common Stock account Retained earnings

What is the difference between book value and market value of stock?

Which of the following is an account in stockholders' equity?

Select the letter of the term each statement best describes. -An arbitrary amount stated on the face of the stock certificate that represents the legal capital of the firm.

Match the terms to the definitions by selecting the letter of the term. Each term may be used more than once or not at all. -The amount received for the issuance of stock in excess of par value.

From the following list, identify each item as operating O, investing I, financing F, or not separately reported on the statement of cash flows N. -Declaration of stock split

Explain the difference between authorized, issued, and outstanding shares.

Which of the following statements is true with regard to contributed capital?

Montana City Company began business on January 1, 2015. The corporate charter authorized issuance of 500 shares of $1 par value common stock and 400 shares of $4 par value, 3% cumulative preferred stock. What is the maximum amount that can be reported on the balance sheet for Common Stock and Preferred Stock, respectively, if all of the stock is issued?

Gemini Company has the following accounts in the Stockholders' Equity category of the balance sheet: Common Stock, $10 no par, 10,000 shares authorized, 9,000 issued, 8,000 outstanding Preferred Stock, $100 par, 8%, cumulative, participating, 1,000 shares authorized, issued, and outstanding Required: 1. Explain how the issuance of stock affects the financial statements when the stock has no par value. 2. Why would preferred stockholders want to have a cumulative feature in preferred stock? 3. When a participating feature is present in preferred stock, how does it affect the amount of dividends that preferred stockholders can expect to receive?

Portland Sound Cafe began business on January 1, 2015. The corporate charter authorized issuance of 1,000 shares of no-par value common stock, of which 200 shares were issued, and 4,000 shares of $8 par value, 6% cumulative preferred stock, of which none were issued. Portland Sound sold 400 shares of common stock at $8 per share on May 1. The entry to record the issuance of the shares on May 1 will:

The Stockholders' Equity section of Sea Scape, Inc.'s balance sheet on January 1, 2015, appeared as follows: A On March 1, 2015, Sea Scape resold 800 shares of treasury stock at $25 per share. What is the effect of the March 1 transaction on the accounting equation? B Why is the excess of the sales price of the 800 shares of treasury stock over the cost not reported on the income statement?

The Treasury Stock account should be considered an asset account.

Mendes Charters reported the following information at December 31, 2015: