Question 1

The statement of stockholders' equity for Jutras Corporation shows an increase in the Common Stock account of $8,000, an increase in Additional Paid-in Capital--Common in the amount of $22,000, and an increase in Retained Earnings of $50,000.If the stock has a par value of $3 and dividends of $10,000 were declared and paid during the year, what is the amount of net income for the year?

Accepted Answer

A)  $40,000
B)  $50,000
C)  $60,000
D)  $90,000E) All of the above
F) A) and B)

Question 2

When treasury stock is reissued and the cost is less than the reissue price, the difference increases additional paid- in capital.

Accepted Answer

A) True 
 B)False

Question 3

The cumulative feature of stock allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Accepted Answer

A)  The issuance of stock decreases several important financial ratios.
B)  Issuing bonds dilutes the voting power of the stockholders.
C)  Corporations are not required to return the investment to the stockholders.
D)  Investors expect to earn a higher rate of return on stocks than bonds.E) A) and B)
F) None of the above

Question 5

Select the best answer from the list below to complete statements that follow. 
-The selling price of the stock as indicated by the most recent stock transaction is
___________________________________.

Accepted Answer

market val...

Question 6

When the board of director's declares a cash or stock dividend, this action decreases Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 7

A company purchased machinery by issuing 2,000 shares of $3 par value common stock.Since the company is new, there is no established market price for its stock.How would the company record the transaction?

Accepted Answer

A)  In terms of the par value of the stock issued.
B)  At the fair market value of the machine.
C)  At the cost recorded by the previous owner of the machine.
D)  Recording the transaction would be postponed until a market price for the stock could be determined.E) All of the above
F) None of the above

Question 8

Manson World reported the following:
Common stock, $1 par, 200,000 shares authorized, 100,000 shares issued and outstanding
What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share when the stock split is declared?

Accepted Answer

A)  Retained earnings in the amount of $400,000 is transferred to the contributed capital accounts.
B)  Cash decreases $400,000.
C)  Additional Paid-in Capital increases $400,000.
D)  A stock split has no effect on total stockholders' equity.E) A) and C)
F) None of the above

Question 9

If a company purchases treasury stock for $6,000 and then reissues it for $5,000, the difference of $1,000 is

Accepted Answer

A)  treated as a gain on the sale.
B)  treated as a loss on the sale.
C)  an increase in stockholders' equity.
D)  a decrease in stockholders' equity.E) A) and C)
F) A) and B)

Question 10

[APPENDIX] Which of the following statements regarding partnerships is true?

Accepted Answer

A)  Partnerships have two owners.
B)  The partnership ends when a new partner is added.
C)  The partnership is responsible for its own taxes.
D)  The partnership is a separate legal entity from its owners.E) A) and C)
F) A) and D)

Question 11

When a company declares a stock dividend, which of the following occurs?

Accepted Answer

A)  A liability is created.
B)  Retained earnings is reduced.
C)  Stockholders' equity is decreased.
D)  The financing section of the statement of cash flows is decreased.E) All of the above
F) B) and D)

Question 12

Which of the following is true?

Accepted Answer

A)  The sale of stock to stockholders is an investing activity.
B)  The repurchase of stock from stockholders is an investing activity.
C)  The declaration of stock dividends is a financing activity.
D)  The payment of cash dividends is a financing activity.E) All of the above
F) A) and D)

Question 13

All of the following are reasons for a company to repurchase its previously issued stock, except:

Accepted Answer

A)  to support the market price of the stock
B)  to resell to employees
C)  to increase the shares outstanding
D)  for bonuses to employeesE) A) and B)
F) A) and D)

Question 14

[APPENDIX] Which of the following is true concerning a sole proprietorship?

Accepted Answer

A)  It is a separate legal entity.
B)  It may have more than one class of stock outstanding.
C)  It is owned by one or more persons.
D)  The separate entity concept applies.E) C) and D)
F) All of the above

Question 15

Cash dividends become a liability to a corporation on the date of record.

Accepted Answer

A) True 
 B)False

Question 16

Select the best answer from the list below to complete statements that follow. 
-The number of shares issued less the number of shares held as treasury stock are
______________________________.

Accepted Answer

The answer of Select the best answer from the list...

Question 17

Book value is a measure of the market value of the stock.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is reported as a financing activity?

Accepted Answer

A)  Payment of cash dividends
B)  Declaration of cash dividends
C)  Stock dividend
D)  Stock splitE) A) and C)
F) A) and D)

Question 19

[APPENDIX] When the owner of a sole proprietorship withdraws assets from the business for personal use

Accepted Answer

A)  it is treated like a noncash dividend.
B)  it is illegal because the assets belong to the separate entity, the proprietorship.
C)  it would be recorded as a loss by the proprietorship.
D)  it is recorded as a reduction of owner's equity.E) A) and B)
F) All of the above

Question 20

[APPPENDIX] When an individual wishes to form a sole proprietorship, he or she does so by

Accepted Answer

A)  filing a petition with the IRS.
B)  purchasing stock in the proprietorship.
C)  filing corporate paperwork with the state.
D)  contributing cash or other assets.E) C) and D)
F) None of the above

Exam 11: Stockholders Equity

When the board of director's declares a cash or stock dividend, this action decreases Retained Earnings.

Correct Answer
verified

Book value is a measure of the market value of the stock.

Correct Answer
verified

Manson World reported the following: Common stock, $1 par, 200,000 shares authorized, 100,000 shares issued and outstanding What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share when the stock split is declared?

Correct Answer
verified

[APPENDIX] Which of the following is true concerning a sole proprietorship?

Correct Answer
verified

Select the best answer from the list below to complete statements that follow. -The selling price of the stock as indicated by the most recent stock transaction is ___________________________________.

Correct Answer
verified
market val...
View Answer

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Correct Answer
verified

The cumulative feature of stock allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Correct Answer
verified

Which of the following is reported as a financing activity?

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

All of the following are reasons for a company to repurchase its previously issued stock, except:

Correct Answer
verified

When a company declares a stock dividend, which of the following occurs?

Correct Answer
verified

Correct Answer
verified

A company purchased machinery by issuing 2,000 shares of $3 par value common stock.Since the company is new, there is no established market price for its stock.How would the company record the transaction?

Correct Answer
verified

[APPENDIX] When the owner of a sole proprietorship withdraws assets from the business for personal use

Correct Answer
verified

[APPENDIX] Which of the following statements regarding partnerships is true?

Correct Answer
verified

Cash dividends become a liability to a corporation on the date of record.

Correct Answer
verified

If a company purchases treasury stock for $6,000 and then reissues it for $5,000, the difference of $1,000 is

Correct Answer
verified

Select the best answer from the list below to complete statements that follow. -The number of shares issued less the number of shares held as treasury stock are ______________________________.

Correct Answer
verified

[APPPENDIX] When an individual wishes to form a sole proprietorship, he or she does so by

Correct Answer
verified

When treasury stock is reissued and the cost is less than the reissue price, the difference increases additional paid- in capital.

Correct Answer
verified

Exam 11: Stockholders Equity

When the board of director's declares a cash or stock dividend, this action decreases Retained Earnings.

Correct AnswerverifiedShow Answer

Book value is a measure of the market value of the stock.

Correct AnswerverifiedShow Answer

Manson World reported the following: Common stock, $1 par, 200,000 shares authorized, 100,000 shares issued and outstanding What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share when the stock split is declared?

Correct AnswerverifiedShow Answer

[APPENDIX] Which of the following is true concerning a sole proprietorship?

Correct AnswerverifiedShow Answer

Select the best answer from the list below to complete statements that follow. -The selling price of the stock as indicated by the most recent stock transaction is ___________________________________.

Correct Answerverifiedmarket val...View AnswerShow Answer

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Correct AnswerverifiedShow Answer

The cumulative feature of stock allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

Correct AnswerverifiedShow Answer

Which of the following is reported as a financing activity?

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

All of the following are reasons for a company to repurchase its previously issued stock, except:

Correct AnswerverifiedShow Answer

When a company declares a stock dividend, which of the following occurs?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company purchased machinery by issuing 2,000 shares of $3 par value common stock.Since the company is new, there is no established market price for its stock.How would the company record the transaction?

Correct AnswerverifiedShow Answer

[APPENDIX] When the owner of a sole proprietorship withdraws assets from the business for personal use

Correct AnswerverifiedShow Answer

[APPENDIX] Which of the following statements regarding partnerships is true?

Correct AnswerverifiedShow Answer

Cash dividends become a liability to a corporation on the date of record.

Correct AnswerverifiedShow Answer

If a company purchases treasury stock for $6,000 and then reissues it for $5,000, the difference of $1,000 is

Correct AnswerverifiedShow Answer

Select the best answer from the list below to complete statements that follow. -The number of shares issued less the number of shares held as treasury stock are ______________________________.

Correct AnswerverifiedShow Answer

[APPPENDIX] When an individual wishes to form a sole proprietorship, he or she does so by

Correct AnswerverifiedShow Answer

When treasury stock is reissued and the cost is less than the reissue price, the difference increases additional paid- in capital.

Correct AnswerverifiedShow Answer

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market val...
View Answer

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