Question 1

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

Accepted Answer

A) True 
 B)False

Question 2

A corporation is a legal entity separate from its owners.

Accepted Answer

A) True 
 B)False

Question 3

Retained earnings are part of the stockholders' claims on the company's net assets.

Accepted Answer

A) True 
 B)False

Question 4

Lewis Company had net income of $67,000.The company had 9,000 weighted average common shares outstanding.The basic earnings per share equals $7.44 per share.

Accepted Answer

A) True 
 B)False

Question 5

Common shareholders always share equally with all other shareholders (including preferred shareholders)in dividends.

Accepted Answer

A) True 
 B)False

Question 6

If a company resells treasury stock below the acquisition cost,a loss from the sale of treasury stock is recorded.

Accepted Answer

A) True 
 B)False

Question 7

MBP Company has 10,000 shares of $10 par preferred stock,which were issued at par.It also has 250,000 shares of common stock outstanding,and its total stockholders' equity equals $4,000,000.The book value per common share is:

Accepted Answer

A)  $16.67.
B)  $16.00.
C)  $40.00.
D)  $15.60.
E)  $10.00.F) A) and E)
G) B) and C)

Question 8

A company has earnings per share of $6.50.Its dividend per share is $0.50,and its market price per share is $80.Its price-earnings ratio equals 13.

Accepted Answer

A) True 
 B)False

Question 9

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share.The entry to record this transaction would include:

Accepted Answer

A)  A debit to Paid-in Capital in Excess of Par Value,Common Stock for $182,000.
B)  A debit to Cash for $14,000.
C)  A credit to Common Stock for $182,000.
D)  A credit to Common Stock for $14,000.
E)  A credit to Paid-in Capital in Excess of Par Value,Common Stock for $196,000.F) A) and E)
G) B) and C)

Question 10

Book value per share:

Accepted Answer

A)  Reflects the value per share if a company is liquidated at balance sheet amounts.
B)  Is assets divided by equity.
C)  Is assets divided by the number of common shares outstanding.
D)  Measures the current market value assets.
E)  Is equal to par value per share.F) B) and E)
G) A) and B)

Question 11

A premium on common stock:

Accepted Answer

A)  Occurs when a corporation sells its stock for more than par or stated value.
B)  Is the difference between par value and issue price when the amount paid is below par.
C)  Represents profit from issuing stock.
D)  Represents capital gain on sale of stock.
E)  Is prohibited in most states.F) A) and E)
G) B) and E)

Question 12

A corporation declared and issued a 15% stock dividend on October 1.The following information was available immediately prior to the dividend:  The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

Accepted Answer

A)  $45,000.
B)  $135,000.
C)  $(45,000) .
D)  $(135,000) .
E)  $0.F) All of the above
G) A) and D)

Question 13

A corporation with $10 par common stock issues a small stock dividend.The capitalization of retained earnings is equal to:

Accepted Answer

A)  The par value of the shares to be distributed.
B)  The par value of the shares outstanding.
C)  The market value of the shares to be distributed.
D)  The market value of the shares outstanding.
E)  There is no capitalization of retained earnings in the case of a small stock dividend.F) A) and E)
G) A) and B)

Question 14

The cumulative net income and loss not distributed as dividends to a corporation's shareholders is called ________.

Accepted Answer

The answer of The cumulative net income and loss not...

Question 15

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

Accepted Answer

A)  Common stock's market value.
B)  Earnings per share.
C)  Investors' purchase price of the stock.
D)  Amount of retained earnings.
E)  Amount of cash.F) A) and B)
G) A) and C)

Question 16

A company reported $1,050,000 in net income for the current year.Earnings per common share is $1.75 and the year-end market price of the shares is $31.50.Calculate the company's price earnings ratio.

Accepted Answer

Price-Earnings Ratio = Market ...

Question 17

The board of directors of a corporation:

Accepted Answer

A)  Are elected by the corporate registrar.
B)  Are responsible for day-to-day operations of the business.
C)  Do not have the power to bind the corporation to contracts,due to lack of mutual agency.
D)  May not also be executive officers of the corporation,due to the separate entity principle.
E)  Are responsible for overseeing corporate activities.F) C) and E)
G) A) and B)

Question 18

Preferred stock that has the right to prior periods' unpaid dividends even if they were not declared is called:

Accepted Answer

A)  Noncumulative preferred stock.
B)  Participating preferred stock.
C)  Callable preferred stock.
D)  Cumulative preferred stock.
E)  Convertible preferred stock.F) A) and D)
G) C) and D)

Question 19

The following data has been collected about Keller Company's stockholders' equity accounts: 
-Assuming the treasury shares were all purchased at the same price,the cost per share of the treasury stock is:

Accepted Answer

A)  $1.15.
B)  $1.28.
C)  $11.50.
D)  $10.50.
E)  $10.00.F) C) and D)
G) B) and C)

Question 20

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1.Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27.The entry to record the dividend declaration is:

Accepted Answer

A)  Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000.
B)  Debit Retained Earnings $135,000; credit Cash $135,000.
C)  Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value,Common Stock $35,000.
D)  Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000.
E)  No entry is made until the stock is issued.F) A) and B)
G) C) and D)

Exam 11: Corporate Reporting and Analysis

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

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Preferred stock that has the right to prior periods' unpaid dividends even if they were not declared is called:

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Book value per share:

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A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share.The entry to record this transaction would include:

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A corporation is a legal entity separate from its owners.

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The following data has been collected about Keller Company's stockholders' equity accounts: -Assuming the treasury shares were all purchased at the same price,the cost per share of the treasury stock is:

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A corporation with $10 par common stock issues a small stock dividend.The capitalization of retained earnings is equal to:

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Retained earnings are part of the stockholders' claims on the company's net assets.

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Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

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Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1.Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27.The entry to record the dividend declaration is:

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MBP Company has 10,000 shares of $10 par preferred stock,which were issued at par.It also has 250,000 shares of common stock outstanding,and its total stockholders' equity equals $4,000,000.The book value per common share is:

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Lewis Company had net income of $67,000.The company had 9,000 weighted average common shares outstanding.The basic earnings per share equals $7.44 per share.

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A premium on common stock:

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If a company resells treasury stock below the acquisition cost,a loss from the sale of treasury stock is recorded.

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A company has earnings per share of $6.50.Its dividend per share is $0.50,and its market price per share is $80.Its price-earnings ratio equals 13.

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A company reported $1,050,000 in net income for the current year.Earnings per common share is $1.75 and the year-end market price of the shares is $31.50.Calculate the company's price earnings ratio.

Correct AnswerverifiedPrice-Earnings Ratio = Market ...View AnswerShow Answer

The cumulative net income and loss not distributed as dividends to a corporation's shareholders is called ________.

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The board of directors of a corporation:

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A corporation declared and issued a 15% stock dividend on October 1.The following information was available immediately prior to the dividend: The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

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Common shareholders always share equally with all other shareholders (including preferred shareholders)in dividends.

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Price-Earnings Ratio = Market ...
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