Description
2. Question : Stocks that pay relatively large cash dividends on a regular basis are called
Student Answer: Small capital stocks
Mid capital stocks
Growth stocks
Large capital stocks
Income stocks
3. Question : A corporation sold 14,000 shares of its $10 par value common stock at a cash price of $13 per share. The entry to record this transaction would include
Student Answer: A debit to Contributed Capital in Excess of Par Value, Common Stock for $42,000
A debit to Cash for $140,000
A credit to Common Stock for $182,000
A credit to Common Stock for $140,000
A credit to Contributed Capital in Excess of Par Value, Common Stock for $182,000
4. Question : A corporation’s distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a
Student Answer: Stock dividend
Stock subscription
Premium on stock
Discount on stock
Treasury stock
5. Question : Stockholders’ equity consists of
Student Answer: Long-term assets
Contributed capital and retained earnings
Contributed capital and par value
Retained earnings and cash
Premiums and discounts
6. Question : The statement of changes in stockholders’ equity
Student Answer: Is part of the statement of retained earnings
Shows only the ending balances in stockholders’ equity
Describes changes in contributed capital and retained earnings subcategories
Does not include changes in treasury stock
Is reported by very few companies
7. Question : A company issued 60 shares of $100 par value stock for $7,000 cash. The total amount of contributed capital is
Student Answer: $100
$600
$1,000
$6,000
$7,000
8. Question : Book value per share
Student Answer: Reflects the value per share if a company is liquidated at balance sheet amounts
Is assets divided by equity
Is assets divided by the number of common shares outstanding
Measures the worth of assets
Is equal to par value per share
9. Question : A company has a market value per share of $73.00. Its net income is $1,750,000 and the weighted-average number of shares outstanding is 350,000. The company’s price-earnings ratio equals
Student Answer: 20.9
4.2
14.6
20.0
6.8
10. Question : A company’s board of directors votes to declare a total cash dividend of $25,000. The company has 2,500 shares of $1 par common stock and 400 shares of 4%, $200 par preferred stock outstanding. What is the total amount that will be paid to preferred shareholders?
Student Answer: $1,000
$22,500
$400
$3,200
$25,000
11. Question : A company paid $0.75 in cash dividends per share. Its earnings per share is $3.50 and its market price per share is $37.50. Its dividend yield equals
Student Answer: 11.7%
2.0%
10.9%
21.4%
46.7%
12. Question : A premium on common stock
Student Answer: Is the amount paid in excess of par by purchasers of newly issued stock
Is the difference between par value and issue price when the amount paid is below par
Represents profit from issuing stock
Represents capital gain on sale of stock
Is prohibited in most states
13. Question : A corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include
Student Answer: A debit to Organization Expenses for $3,000
A debit to Organization Expenses for $5,000
A credit to Common Stock for $5,000
A credit to Contributed Capital in Excess of Par Value, Common Stock for $5,000
A debit to Contributed Capital in Excess of Par Value, Common Stock for $2,000
14. Question : Retained earnings
Student Answer: Generally consists of a company’s cumulative net income less any net losses and dividends declared since its inception
Can only be appropriated by setting aside a cash fund
Represent an amount of cash available to pay shareholders
Are never adjusted for anything other than net income or dividends
All of the above
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