Chapter 12 – Corporations: Organization, Stock Transactions, and Dividends
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Page 51
a.
$34,000
b.
$37,000
c.
$41,000
d.
$44,000
ANSWER:
a
RATIONALE:
Year-end retained earnings balance = Beginning retained earnings balance –
Depreciation expense + Net income – Cash dividends = $32,000 – $3,000 + $12,000 –
$7,000 = $34,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.12–06 – LO: 12–06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.20 – Accounting for Corporations
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:31 PM
DATE MODIFIED:
10/16/2017 6:21 PM
123. The two main sources of stockholders’ equity are
a.
investments by stockholders and net income retained in the business
b.
investments by stockholders and dividends paid
c.
net income retained in the business and dividends paid
d.
investments by stockholders and purchases of assets
ANSWER:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
124. Treasury stock should be reported in the financial statements of a corporation as a(n)
a.
investment
b.
liability
c.
current asset
d.
deduction from stockholders’ equity
ANSWER:
POINTS:
Chapter 12 – Corporations: Organization, Stock Transactions, and Dividends
Copyright Cengage Learning. Powered by Cognero.
Page 54
c.
increase the market price of the stock per share
d.
increase retained earnings
ANSWER:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
130. Which of the following statements is not true about a 2-for-1 split?
a.
Par value per share is reduced to half of what it was before the split.
b.
Total contributed capital increases.
c.
The market price will probably decrease.
d.
A stockholder with ten shares before the split owns twenty shares after the split.
ANSWER:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
131. A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $150 per share. If
the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately
a.
$25
b.
$150
c.
$5
d.
$30
ANSWER:
d
RATIONALE:
New market value of the stock = Current market price of the stock / Ratio
of stock split = $150 / 5 = $30
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
Chapter 12 – Corporations: Organization, Stock Transactions, and Dividends
Matching
False
FNMN.WAJO.19.12–02 – LO: 12–02
ANSWER:
g
POINTS:
1
145. The dollar amount assigned to each share of stock
ANSWER:
d
POINTS:
1
ANSWER:
POINTS:
1
ANSWER:
f
POINTS:
1
ANSWER:
a
POINTS:
1
ANSWER:
f
POINTS:
1
143. Corporate income distributed to stockholders
ANSWER:
h
POINTS:
1
Matching
False
152. Equity account reflecting shares “owed” to stockholders
ANSWER:
POINTS:
1
153. Shares of common stock that were issued and then reacquired by a company
ANSWER:
e
POINTS:
1
ANSWER:
POINTS:
1
149. The number of shares sold to stockholders
ANSWER:
b
POINTS:
1
150. A class of stock that provides no preference rights to shareholders
ANSWER:
e
POINTS:
1
151. A financial institution that records and maintains records of another company’s stockholders.
ANSWER:
h
POINTS:
1
Matching
False
FNMN.WAJO.19.12–06 – LO: 12–06
155. Cash distribution of a company’s earnings to stockholders
ANSWER:
a
POINTS:
1
156. Account used when shares are issued for an amount greater than par value
ANSWER:
h
POINTS:
1
157. The day of the event that creates a liability to company
ANSWER:
d
POINTS:
1
158. The date that is used to determine the owners of stock who will receive the current dividend
ANSWER:
b
POINTS:
1
159. The date when dividends are actually distributed to stockholders
ANSWER:
g
POINTS:
1