Question 1

At the end of 20X3, Bush Corporation reported a $40,000 balance in its common share account (stated value $5 per share). The treasury share account showed $720 (cost $6 per share). No dividends were paid during the ﬁrst two years. During 20X3 the company declared and paid a cash dividend at $1.50 per share. The total amount of the 20X3 cash dividend was $_______.

Accepted Answer

[($40,000/$5 per sha...

Question 2

Match between columns
                        Premises:  Shares that may, at the option of the holder, be turned in for another security.
 Shares that have been issued, repurchased, and are held by the corporation.
Shares that have specified rights over common shares.
Shares on which dividends in arrears must be paid prior to any current dividends.

Accepted Answer

The Answer of Treasury shares and Convertible shares and Preferred is...

Question 3

An additional contributed surplus account under shareholders' equity is the result of:

Accepted Answer

A)   the sale of preferred shares
B)   the sale of par value shares
C)   the sale of no par value shares
D)   legal capitalE) A) and B)
F) A) and C)

Question 4

What are the advantages of issuing corporate bonds instead of issuing common shares to raise needed funds?

Accepted Answer

Advantages of issuing corporate bonds ra...

Question 5

The issue of common shares affects both share capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 6

For accounting purposes, the most important section of the articles of incorporation is the description of

Accepted Answer

A)   the types of shares to be issued.
B)   the costs of issuing the shares.
C)   the type of business to be conducted.
D)   how the board of directors will be organized.E) B) and C)
F) All of the above

Question 7

On which of the following dates should the dividends payable account be recorded in the company records for a stock dividend?

Accepted Answer

A)   Date of payment.
B)   Date of record.
C)   Date of declaration.
D)   No liability is associated with a share dividend.E) C) and D)
F) A) and D)

Question 8

The authorized shares of a corporation

Accepted Answer

A)   only reflects the initial capital needs of the company.
B)   is indicated in its by-laws.
C)   is indicated in its charter.
D)   must be recorded in a formal accounting entry.E) A) and D)
F) B) and C)

Question 9

A major advantage that a corporation has over a proprietorship or partnership is that it allows individuals to participate in ownership by purchasing small amounts of shares.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true?

Accepted Answer

A)   Common shares have a dividend rate fixed by the share contract.
B)   Preferred shares have a volatile market value therefore, they are a riskier investment than common shares.
C)   Corporations are not always considered to be a separate legal entity.
D)   Transfer of ownership is easy with a corporation.E) A) and C)
F) B) and C)

Question 11

If common shares are reacquired at a price less than their average cost, the difference is credited to contributed surplus.

Accepted Answer

A) True 
 B)False

Question 12

Wide World Corporation issued a 3-for-2 stock split (i.e., three new shares in exchange for each two old shares turned in)  of its common shares which had a market value of $100 before the split. What dollar amount of retained earnings should be transferred to the common share account?

Accepted Answer

A)   Market value before the split.
B)   Market value after the split.
C)   Half of the previous total amount in the common share account(s) .
D)   None should be transferred.E) B) and C)
F) A) and D) D

Question 13

What are the advantages of issuing common shares instead of issuing corporate bonds to raise needed funds?

Accepted Answer

Advantages of issuing common shares rath...

Question 14

Which of the following represents the shares currently in the hands of investors?

Accepted Answer

A)   Authorized shares
B)   Issued shares
C)   Outstanding shares
D)   Unissued sharesE) C) and D)
F) A) and B)

Question 15

Dividends in arrears are liabilities of the corporation.

Accepted Answer

A) True 
 B)False

Question 16

Net earnings available to common shareholders is calculated by deducting preferred dividends from net earnings.

Accepted Answer

A) True 
 B)False  True

Question 17

Which one of the following events would not require a journal entry on a corporation's books?

Accepted Answer

A)   100% stock dividend
B)   2 for 1 stock split
C)   2% stock dividend
D)   $1 per share cash dividendE) B) and D)
F) All of the above

Question 18

The statement of financial position of Warner Company showed the following data about its common shares: authorized shares, 100,000; outstanding shares, 55,000; and issued shares 60,000. What was the number of treasury shares?

Accepted Answer

A)   5,000
B)   30,000
C)   40,000
D)   45,000E) B) and D)
F) All of the above

Question 19

A company can control the market value of its shares.

Accepted Answer

A) True 
 B)False  False

Question 20

A stock dividend usually causes a transfer of retained earnings to share capital, but not a decrease in the assets of the issuing corporation.

Accepted Answer

A) True 
 B)False

Exam 11: Stockholders Equity

Correct Answer
verified
[($40,000/$5 per sha...
View Answer

Match the definitions with the items.

An additional contributed surplus account under shareholders' equity is the result of:

Correct Answer
verified

What are the advantages of issuing corporate bonds instead of issuing common shares to raise needed funds?

Correct Answer
verified
Advantages of issuing corporate bonds ra...
View Answer

The issue of common shares affects both share capital and retained earnings.

Correct Answer
verified

For accounting purposes, the most important section of the articles of incorporation is the description of

Correct Answer
verified

On which of the following dates should the dividends payable account be recorded in the company records for a stock dividend?

Correct Answer
verified

The authorized shares of a corporation

Correct Answer
verified

A major advantage that a corporation has over a proprietorship or partnership is that it allows individuals to participate in ownership by purchasing small amounts of shares.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

If common shares are reacquired at a price less than their average cost, the difference is credited to contributed surplus.

Correct Answer
verified

Wide World Corporation issued a 3-for-2 stock split (i.e., three new shares in exchange for each two old shares turned in) of its common shares which had a market value of $100 before the split. What dollar amount of retained earnings should be transferred to the common share account?

Correct Answer
verified
D

What are the advantages of issuing common shares instead of issuing corporate bonds to raise needed funds?

Correct Answer
verified
Advantages of issuing common shares rath...
View Answer

Which of the following represents the shares currently in the hands of investors?

Correct Answer
verified

Dividends in arrears are liabilities of the corporation.

Correct Answer
verified

Net earnings available to common shareholders is calculated by deducting preferred dividends from net earnings.

Correct Answer
verified
True

Which one of the following events would not require a journal entry on a corporation's books?

Correct Answer
verified

The statement of financial position of Warner Company showed the following data about its common shares: authorized shares, 100,000; outstanding shares, 55,000; and issued shares 60,000. What was the number of treasury shares?

Correct Answer
verified

A company can control the market value of its shares.

Correct Answer
verified
False

A stock dividend usually causes a transfer of retained earnings to share capital, but not a decrease in the assets of the issuing corporation.

Correct Answer
verified

Exam 11: Stockholders Equity

Correct Answerverified[($40,000/$5 per sha...View AnswerShow Answer

Match the definitions with the items.

An additional contributed surplus account under shareholders' equity is the result of:

Correct AnswerverifiedShow Answer

What are the advantages of issuing corporate bonds instead of issuing common shares to raise needed funds?

Correct AnswerverifiedAdvantages of issuing corporate bonds ra...View AnswerShow Answer

The issue of common shares affects both share capital and retained earnings.

Correct AnswerverifiedShow Answer

For accounting purposes, the most important section of the articles of incorporation is the description of

Correct AnswerverifiedShow Answer

On which of the following dates should the dividends payable account be recorded in the company records for a stock dividend?

Correct AnswerverifiedShow Answer

The authorized shares of a corporation

Correct AnswerverifiedShow Answer

A major advantage that a corporation has over a proprietorship or partnership is that it allows individuals to participate in ownership by purchasing small amounts of shares.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

If common shares are reacquired at a price less than their average cost, the difference is credited to contributed surplus.

Correct AnswerverifiedShow Answer

Wide World Corporation issued a 3-for-2 stock split (i.e., three new shares in exchange for each two old shares turned in) of its common shares which had a market value of $100 before the split. What dollar amount of retained earnings should be transferred to the common share account?

Correct AnswerverifiedD

What are the advantages of issuing common shares instead of issuing corporate bonds to raise needed funds?

Correct AnswerverifiedAdvantages of issuing common shares rath...View AnswerShow Answer

Which of the following represents the shares currently in the hands of investors?

Correct AnswerverifiedShow Answer

Dividends in arrears are liabilities of the corporation.

Correct AnswerverifiedShow Answer

Net earnings available to common shareholders is calculated by deducting preferred dividends from net earnings.

Correct AnswerverifiedTrue

Which one of the following events would not require a journal entry on a corporation's books?

Correct AnswerverifiedShow Answer

The statement of financial position of Warner Company showed the following data about its common shares: authorized shares, 100,000; outstanding shares, 55,000; and issued shares 60,000. What was the number of treasury shares?

Correct AnswerverifiedShow Answer

A company can control the market value of its shares.

Correct AnswerverifiedFalse

A stock dividend usually causes a transfer of retained earnings to share capital, but not a decrease in the assets of the issuing corporation.

Correct AnswerverifiedShow Answer

Correct Answer
verified
[($40,000/$5 per sha...
View Answer

Correct Answer
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Advantages of issuing corporate bonds ra...
View Answer

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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D

Correct Answer
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Advantages of issuing common shares rath...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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True

Correct Answer
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Correct Answer
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Correct Answer
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False

Correct Answer
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