Question 1

Dividends in arrears on cumulative preferred stock are reported as current liabilities.

Accepted Answer

A) True 
 B)False

Question 2

What was the average exercise price per share of stock issued under option plans in 2007?

Accepted Answer

The averag...

Question 3

The changes in account balances for Allen Inc. for 2009 are as follows: Assuming the only changes in retained earnings in 2009 were for net income and a $25,000 dividend, what was net income for 2009?

Accepted Answer

A)  $30,000
B)  $20,000
C)  $15,000
D)  $ 5,000E) All of the above
F) B) and D)

Question 4

The owners of a corporation are its shareholders. If a corporation has only one class of shares, they typically are labeled common shares. Each of the following are ownership rights held by common shareholders, unless specifically withheld by agreement except:

Accepted Answer

A)  The right to vote on policy issues.
B)  The right to share in profits when dividends are declared (in proportion to the percentage of shares owned by the shareholder) .
C)  The right to dividends equal to a stated rate time par value (if dividends are paid) .
D)  The right to share in the distribution of any assets remaining at liquidation after other claims are satisfied.E) C) and D)
F) All of the above

Question 5

When a company issues a stock dividend which of the following would be affected?

Accepted Answer

A)  Earnings per share.
B)  Total assets.
C)  Total liabilities.
D)  Total stockholder's equity.When a company issues a stock dividend, earnings per share decreases as the number of shares outstanding increases.There is no effect on total assets, total liabilities or total stockholders' equity.E) B) and D)
F) All of the above

Question 6

During its first year of operations, Criswell Inc. completed the following transactions relating to shareholders' equity.
Jan. 5: Issued 300,000 of its common shares for $8 per share and 3,000 preferred shares at $110.
Feb. 12: Issued 50,000 shares of common stock in exchange for equipment with a known cash price of $310,000.
The articles of incorporation authorize 5,000,000 shares with a par value of $1 per share of common and 1,000,000 preferred shares with a par value of $100 per share.
Required:
Record the above transactions in general journal form.

Accepted Answer

The answer of During its first year of operations, Criswell...

Question 7

Noncash assets received as consideration for the issue of stock are always valued based on the fair value of the stock.

Accepted Answer

A) True 
 B)False

Question 8

The Model Business Corporation Act:

Accepted Answer

A)  Uses the word "common" and "preferred" in describing distinguishing characteristics of stock.
B)  Defines legal capital as the amount of net assets not available for distribution to shareholders.
C)  Provides guidance for choosing an appropriate par value for new issues of stock.
D)  Has affected the laws of most states.E) A) and C)
F) B) and D)

Question 9

On October 15, 2009, a 5% stock dividend was declared and distributed. The market value of the common stock on this date was $32 per share. Fractional share rights represented 100,000 shares. Cash was paid in lieu of issuing fractional share rights. On the date of declaration and payment, the company had 10 million shares of common stock outstanding. The par value of the common shares was $5.
Required:
Prepare any necessary journal entries to record the above events.

Accepted Answer

The answer of On October 15, 2009, a 5% stock...

Question 10

Which of the following statements is true when dividends are not declared or paid on cumulative preferred stock?

Accepted Answer

A)  The shareholders must be allowed to convert their shares to common stock.
B)  The unpaid dividends are accrued as a liability.
C)  The unpaid dividends are reported in a note to the financial statements.
D)  The unpaid dividends accrue interest until paid.E) A) and B)
F) A) and C)

Question 11

When stock is issued for consideration other than cash, what is the measurement objective?

Accepted Answer

The measurement objective is that the tr...

Question 12

Preferred shares that are participating may:

Accepted Answer

A)  Vote for the board of directors.
B)  Be exchanged for common stock.
C)  Receive extra cash during corporate liquidation.
D)  Receive additional dividends beyond the stated amount.E) B) and C)
F) C) and D)

Question 13

When stock is issued in exchange for property, the best evidence of fair value might be any of the following except:

Accepted Answer

A)  The appraised value of the property received.
B)  The selling price of the stock in a recent transaction.
C)  The price of the stock quoted on the stock exchange.
D)  The average book value of outstanding stock.E) All of the above
F) B) and C)

Question 14

Montgomery & Co., a well established law firm, provided 500 hours of its time to Fink Corporation in exchange for 1,000 shares of Fink's $5 par common stock. Mitchell's usual billing rate is $700 per hour, and Fink's stock has a book value of $250 per share. By what amount will Fink's Paid-in capital - excess of par increase for this transaction?

Accepted Answer

A)  $345,000.
B)  $295,000.
C)  $350,000.
D)  $300,000.E) All of the above
F) A) and C)

Question 15

The declaration and issuance of a common stock dividend:

Accepted Answer

A)  Has no effect on assets, liabilities, or total shareholders' equity.
B)  Decreases total shareholders' equity and increases common stock.
C)  Decreases assets and decreases total shareholders' equity.
D)  Does not change retained earnings or paid-in capital.E) All of the above
F) A) and C)

Question 16

How many shares of treasury stock did Stubblefield use during 2006, and for what purpose(s)?

Accepted Answer

21,221 thousand shares were us...

Question 17

Poodle Corporation was organized on January 3, 2009. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2009, Poodle had the following transactions relating to shareholders' equity: Issued 30,000 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.
What is total Paid-in capital at the end of 2009?

Accepted Answer

A)  $420,000.
B)  $370,000.
C)  $470,000.
D)  $320,000.(30,000 $7)  + (20,000 $8)  = $370,000E) A) and C)
F) All of the above

Question 18

At the beginning of 2007, Emily Corporation issued 10,000 shares of $100 par, 5%, cumulative, preferred stock for $110 per share. No dividends have been paid to preferred shareholders. What amount of dividends will a shareholder owning 100 shares receive in 2009 if Emily pays $1,000,000 in dividends?

Accepted Answer

A)  $ 500.
B)  $ 1,500.
C)  $ 1,650.
D)  $10,000.$100 5% 100 shares 3 years.E) None of the above
F) C) and D)

Question 19

Outstanding common stock is:

Accepted Answer

A)  Stock that is performing well on the New York Stock Exchange.
B)  Stock that has been authorized by the state for issue.
C)  Stock held in the corporate treasury.
D)  Stock in the hands of shareholders.E) None of the above
F) A) and C)

Question 20

Paid-in capital must consist solely of amounts invested by shareholders.

Accepted Answer

A) True 
 B)False

Exam 18: Shareholders Equity

Correct Answer
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Correct Answer
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The declaration and issuance of a common stock dividend:

Correct Answer
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When stock is issued for consideration other than cash, what is the measurement objective?

Correct Answer
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The measurement objective is that the tr...
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When stock is issued in exchange for property, the best evidence of fair value might be any of the following except:

Correct Answer
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Dividends in arrears on cumulative preferred stock are reported as current liabilities.

Correct Answer
verified

What was the average exercise price per share of stock issued under option plans in 2007?

Correct Answer
verified
The averag...
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The changes in account balances for Allen Inc. for 2009 are as follows: Assuming the only changes in retained earnings in 2009 were for net income and a $25,000 dividend, what was net income for 2009?

Correct Answer
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Correct Answer
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Correct Answer
verified

The Model Business Corporation Act:

Correct Answer
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The owners of a corporation are its shareholders. If a corporation has only one class of shares, they typically are labeled common shares. Each of the following are ownership rights held by common shareholders, unless specifically withheld by agreement except:

Correct Answer
verified

Noncash assets received as consideration for the issue of stock are always valued based on the fair value of the stock.

Correct Answer
verified

When a company issues a stock dividend which of the following would be affected?

Correct Answer
verified

Paid-in capital must consist solely of amounts invested by shareholders.

Correct Answer
verified

Correct Answer
verified

Outstanding common stock is:

Correct Answer
verified

How many shares of treasury stock did Stubblefield use during 2006, and for what purpose(s)?

Correct Answer
verified
21,221 thousand shares were us...
View Answer

Which of the following statements is true when dividends are not declared or paid on cumulative preferred stock?

Correct Answer
verified

Preferred shares that are participating may:

Correct Answer
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Exam 18: Shareholders Equity

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The declaration and issuance of a common stock dividend:

Correct AnswerverifiedShow Answer

When stock is issued for consideration other than cash, what is the measurement objective?

Correct AnswerverifiedThe measurement objective is that the tr...View AnswerShow Answer

When stock is issued in exchange for property, the best evidence of fair value might be any of the following except:

Correct AnswerverifiedShow Answer

Dividends in arrears on cumulative preferred stock are reported as current liabilities.

Correct AnswerverifiedShow Answer

What was the average exercise price per share of stock issued under option plans in 2007?

Correct AnswerverifiedThe averag...View AnswerShow Answer

The changes in account balances for Allen Inc. for 2009 are as follows: Assuming the only changes in retained earnings in 2009 were for net income and a $25,000 dividend, what was net income for 2009?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Model Business Corporation Act:

Correct AnswerverifiedShow Answer

The owners of a corporation are its shareholders. If a corporation has only one class of shares, they typically are labeled common shares. Each of the following are ownership rights held by common shareholders, unless specifically withheld by agreement except:

Correct AnswerverifiedShow Answer

Noncash assets received as consideration for the issue of stock are always valued based on the fair value of the stock.

Correct AnswerverifiedShow Answer

When a company issues a stock dividend which of the following would be affected?

Correct AnswerverifiedShow Answer

Paid-in capital must consist solely of amounts invested by shareholders.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Outstanding common stock is:

Correct AnswerverifiedShow Answer

How many shares of treasury stock did Stubblefield use during 2006, and for what purpose(s)?

Correct Answerverified21,221 thousand shares were us...View AnswerShow Answer

Which of the following statements is true when dividends are not declared or paid on cumulative preferred stock?

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Preferred shares that are participating may:

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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The measurement objective is that the tr...
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Correct Answer
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Correct Answer
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Correct Answer
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The averag...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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21,221 thousand shares were us...
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Correct Answer
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Correct Answer
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