Question

1. When recording the issuance of preferred stock, what amount is credited to the Preferred Stock account if 100 shares of $3 par value preferred stock are issued for $6 per share?
a. $600
b. $100
c. $300
d. None of the above
2. A company with 4,000 shares of $1 par common stock and 3,000 shares of 10% $10 par preferred stock issues a $10,000 cash dividend. How is the dividend allocated to common and preferred stockholders if there was one year of dividends in arrears?
a. $6,000 to common stockholders; $4,000 to preferred stockholders
b. $4,000 to common stockholders; $6,000 to preferred stockholders
c. $7,000 to common stockholders; $3,000 to preferred stockholders
d. $3,000 to common stockholders; $7,000 to preferred stockholders
3. Corporations sometimes purchase treasury stock because:
a. they want to increase the number of shares held by stockholders.
b. management believes that the stock price is overvalued.
c. they need shares that can be issued to employees under the company's stock compensation plans.
d. none of the above.
4. What accounts are affected when recording the purchase of treasury stock?
a. Debit Treasury Stock, Credit Cash
b. Debit Cash, Credit Treasury Stock
c. Debit Cash, Credit Common Stock
d. Debit Treasury Stock, Credit Common Stock
5. How is treasury stock reported on the financial statements of a corporation?
a. As a liability on the balance sheet
b. As a positive amount in the stockholders' equity section of the balance sheet
c. As a negative amount in the stockholders' equity section of the balance sheet
d. None of the above
6. In performing a vertical analysis of total stockholders' equity, one would:
a. divide current year equity by prior year equity.
b. divide equity by liabilities.
c. divide equity by total assets.
d. divide common stock by total equity.
7. Which of the following is true regarding Earnings per share?
a. This is a good measure of liquidity for a corporation
b. It is calculated by dividing net income by average shares of common stock outstanding
c. This calculation is not a required disclosure
d. It is calculated by dividing net income by total equity
8. What ratio compares a company's dividends to its earnings to demonstrate the percentage of earnings a company has decided to distribute to owners through cash dividends?
a. Earnings per share
b. Dividend payout ratio
c. Return on equity
d. Dividend yield
9. Equity activities such as the issuance of stock and the payment of cash dividends are reported in which section of the statement of cash flows?
a. Investing
b. Financing
c. Operating
d. None of the above


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  • CreatedJuly 16, 2015
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