Question 1

Court Casuals has 100,000 shares of common stock outstanding as of the beginning of 2012 and has the following transactions affecting stockholders' equity in 2012.
Record each of these transactions.

Accepted Answer

The answer of Court Casuals has 100,000 shares of common...

Question 2

The par value of shares issued is normally recorded in the:

Accepted Answer

A)  Additional Paid-in Capital account.
B)  Common Stock account.
C)  Retained Earnings account.
D)  Treasury Stock account.E) A) and D)
F) B) and D)

Question 3

Dividends are paid on all shares issued by the company including treasury stock.

Accepted Answer

A) True 
 B)False

Question 4

When treasury stock is purchased,what is the effect on assets and stockholders' equity?

Accepted Answer

A)  Assets and stockholders' equity increase.
B)  Assets and stockholders' equity decrease.
C)  Assets increase and stockholders' equity decrease.
D)  Assets decrease and stockholders' equity increase.E) None of the above
F) B) and C)

Question 5

Outstanding common stock refers to the total number of shares:

Accepted Answer

A)  Issued.
B)  Issued plus treasury stock.
C)  Issued less treasury stock.
D)  Authorized.E) None of the above
F) B) and D)

Question 6

Owners in a sole proprietorship or a partnership can be held personally liable for debts the company has incurred,over and beyond the investment they have made.

Accepted Answer

A) True 
 B)False

Question 7

Return on equity is calculated as:

Accepted Answer

A)  Net income divided by average stockholders' equity.
B)  Net income divided by ending stockholders' equity.
C)  Net income divided by average market value of equity.
D)  Net income divided by ending market value of equity.E) None of the above
F) A) and D)

Question 8

In the event a corporation is dissolved,common stockholders receive preference over preferred stockholders in the distribution of assets.

Accepted Answer

A) True 
 B)False

Question 9

Roberto Corporation was organized on January 1,2012.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2012,Roberto had the following transactions relating to stockholders' equity: Issued 10,000 shares of common stock at $7 per share.
Issued 20,000 shares of common stock at $8 per share.
Reported a net income of $100,000.
Paid dividends of $50,000.
Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8) .
What is total stockholders' equity at the end of 2012?

Accepted Answer

A)  $270,000.
B)  $300,000.
C)  $250,000.
D)  $200,000.E) A) and B)
F) A) and D)

Question 10

A stock split has no effect on the total of any account in stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 11

Why doesn't stockholders' equity equal the market value of equity?

Accepted Answer

A)  Stockholders' equity usually does equal the market value of equity.
B)  Investors tend to incorrectly price the market value of equity.
C)  It's related to the use of historical cost to report many long-term assets and the expensing of value generating costs such as research and development and advertising.
D)  It's due to incorrect entries prepared by accountants.E) A) and B)
F) B) and C)

Question 12

The issuer of a 100% common stock dividend (large stock dividend) to common stockholders should debit stock dividends for an amount equal to the

Accepted Answer

A)  Book value of the shares issued.
B)  Par value of the shares issued.
C)  Market value of the shares issued.
D)  Minimum legal requirements.E) C) and D)
F) B) and D)

Question 13

An S Corporation allows a company to enjoy limited liability as a corporation,but tax treatment as a partnership.

Accepted Answer

A) True 
 B)False

Question 14

California Adventures issues 5,000 shares of 8%,$100 par value preferred stock at the beginning of 2011.All remaining shares are common stock.The company was not able to pay dividends in 2011,but plans to pay dividends of $100,000 in 2012.Assuming the preferred stock is cumulative,how much of the $100,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2012?

Accepted Answer

A)  $6,000 to preferred stockholders and $12,000 to common stockholders.
B)  $18,000 to preferred stockholders and $0 to common stockholders.
C)  $12,000 to preferred stockholders and $6,000 to common stockholders.
D)  $9,000 to preferred stockholders and $9,000 to common stockholders.E) A) and B)
F) None of the above

Question 15

Which of the following has the highest expected return to the investor?

Accepted Answer

A)  Common Stock.
B)  Preferred Stock.
C)  Bonds.
D)  They all have similar expected returns.E) A) and B)
F) C) and D)

Question 16

In terms of total sales,assets,and earnings,the dominant form of business organization is the:

Accepted Answer

A)  Sole proprietorship.
B)  Partnership.
C)  Corporation.
D)  Limited liability company (LL
C)  .E) A) and B)
F) B) and C)

Question 17

Authorized common stock refers to the total number of shares:

Accepted Answer

A)  Outstanding.
B)  Issued.
C)  Issued and outstanding.
D)  That can be issued.E) A) and B)
F) C) and D)

Question 18

Assets plus liabilities equal stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 19

Tropical Rainwear issues 1,000 shares of its $20 par value preferred stock for cash at $22 per share.Record the issuance of the preferred shares.

Accepted Answer

The answer of Tropical Rainwear issues 1,000 shares of its...

Question 20

We calculate earnings per share as net income divided by the average shares outstanding during the period.

Accepted Answer

A) True 
 B)False

Exam 10: Stockholders Equity

Tropical Rainwear issues 1,000 shares of its $20 par value preferred stock for cash at $22 per share.Record the issuance of the preferred shares.

Correct Answer
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Correct Answer
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In the event a corporation is dissolved,common stockholders receive preference over preferred stockholders in the distribution of assets.

Correct Answer
verified

Owners in a sole proprietorship or a partnership can be held personally liable for debts the company has incurred,over and beyond the investment they have made.

Correct Answer
verified

An S Corporation allows a company to enjoy limited liability as a corporation,but tax treatment as a partnership.

Correct Answer
verified

A stock split has no effect on the total of any account in stockholders' equity.

Correct Answer
verified

When treasury stock is purchased,what is the effect on assets and stockholders' equity?

Correct Answer
verified

Assets plus liabilities equal stockholders' equity.

Correct Answer
verified

The par value of shares issued is normally recorded in the:

Correct Answer
verified

Which of the following has the highest expected return to the investor?

Correct Answer
verified

In terms of total sales,assets,and earnings,the dominant form of business organization is the:

Correct Answer
verified

The issuer of a 100% common stock dividend (large stock dividend) to common stockholders should debit stock dividends for an amount equal to the

Correct Answer
verified

Why doesn't stockholders' equity equal the market value of equity?

Correct Answer
verified

We calculate earnings per share as net income divided by the average shares outstanding during the period.

Correct Answer
verified

Authorized common stock refers to the total number of shares:

Correct Answer
verified

Correct Answer
verified

Dividends are paid on all shares issued by the company including treasury stock.

Correct Answer
verified

Return on equity is calculated as:

Correct Answer
verified

Court Casuals has 100,000 shares of common stock outstanding as of the beginning of 2012 and has the following transactions affecting stockholders' equity in 2012. Record each of these transactions.

Correct Answer
verified

Outstanding common stock refers to the total number of shares:

Correct Answer
verified

Exam 10: Stockholders Equity

Tropical Rainwear issues 1,000 shares of its $20 par value preferred stock for cash at $22 per share.Record the issuance of the preferred shares.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the event a corporation is dissolved,common stockholders receive preference over preferred stockholders in the distribution of assets.

Correct AnswerverifiedShow Answer

Owners in a sole proprietorship or a partnership can be held personally liable for debts the company has incurred,over and beyond the investment they have made.

Correct AnswerverifiedShow Answer

An S Corporation allows a company to enjoy limited liability as a corporation,but tax treatment as a partnership.

Correct AnswerverifiedShow Answer

A stock split has no effect on the total of any account in stockholders' equity.

Correct AnswerverifiedShow Answer

When treasury stock is purchased,what is the effect on assets and stockholders' equity?

Correct AnswerverifiedShow Answer

Assets plus liabilities equal stockholders' equity.

Correct AnswerverifiedShow Answer

The par value of shares issued is normally recorded in the:

Correct AnswerverifiedShow Answer

Which of the following has the highest expected return to the investor?

Correct AnswerverifiedShow Answer

In terms of total sales,assets,and earnings,the dominant form of business organization is the:

Correct AnswerverifiedShow Answer

The issuer of a 100% common stock dividend (large stock dividend) to common stockholders should debit stock dividends for an amount equal to the

Correct AnswerverifiedShow Answer

Why doesn't stockholders' equity equal the market value of equity?

Correct AnswerverifiedShow Answer

We calculate earnings per share as net income divided by the average shares outstanding during the period.

Correct AnswerverifiedShow Answer

Authorized common stock refers to the total number of shares:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Dividends are paid on all shares issued by the company including treasury stock.

Correct AnswerverifiedShow Answer

Return on equity is calculated as:

Correct AnswerverifiedShow Answer

Court Casuals has 100,000 shares of common stock outstanding as of the beginning of 2012 and has the following transactions affecting stockholders' equity in 2012. Record each of these transactions.

Correct AnswerverifiedShow Answer

Outstanding common stock refers to the total number of shares:

Correct AnswerverifiedShow Answer

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