Question 1

Which of the following items are NOT reported as part of income from continuing operations?

Accepted Answer

A)   discontinued operations
B)   gross profit
C)   other income and (expenses) 
D)   gain on sale of equipment

Question 2

Corporations may not retire preferred stock in order to avoid paying the preferred dividends.

Accepted Answer

A) True 
 B)False

Question 3

Fallingstar,Inc.has 110,000 shares of common stock issued and outstanding,with a par value of $0.03 per share.It declared a 17% common stock dividend; market value is $14 per share.Which of the following is the correct journal entry to record the transaction? (Round your answers to the nearest whole dollar.)

Accepted Answer

A)   debit Stock Dividends $261,800 and credit Paid-In Capital in Excess of Par-Common $261,800
B)   debit Stock Dividends $261,800, credit Common Stock Dividend Distributable $561, and credit Paid-In Capital in Excess of Par-Common $261,239
C)   debit Stock Dividends $261,800 and credit Cash $261,800
D)   debit Common Stock Dividend Distributable $561, debit Paid-In Capital in Excess of Par-Common $261,239, and credit Retained Earnings $261,800

Question 4

The following information is from the December 31,2018 balance sheet of Millner Corporation.   Preferred Stock, $100 par $560,000 Paid-In Capital in Excess of Par-Preferred 43,000 Common Stock, $1 par 190,000 Paid-In Capital in Excess of Par-Common 510,000 Retained Earnings 191,500‾ Total Stockholders’ Equity $1,494,500\begin{array} { | l | r | } \hline 	ext { Preferred Stock, } \$ 100 	ext { par } & \$ 560,000 \\hline 	ext { Paid-In Capital in Excess of Par-Preferred } & 43,000 \\hline 	ext { Common Stock, } \$ 1 	ext { par } & 190,000 \\hline 	ext { Paid-In Capital in Excess of Par-Common } & 510,000 \\hline 	ext { Retained Earnings } & \underline { 191,500 } \\hline 	ext { Total Stockholders&#x27; Equity } & \$ 1,494,500 \\hline\end{array} Preferred Stock, $100 par  Paid-In Capital in Excess of Par-Preferred  Common Stock, $1 par  Paid-In Capital in Excess of Par-Common  Retained Earnings  Total Stockholders’ Equity ​$560,00043,000190,000510,000191,500​$1,494,500​​  What was the average issue price of the common stock shares? (Round your answer to the nearest cent.)

Accepted Answer

A)   $1.88
B)   $1.00
C)   $2.68
D)   $3.68

Question 5

The price/earnings ratio ________.

Accepted Answer

A)   represents the market price of one share of common stock
B)   of 8.5 implies that the company's earnings per share is 8.5 times the market price of one share of its common stock
C)   is used by investors to measure the liquidity of their portfolio
D)   is most useful when comparing one company to another

Question 6

Belton,Inc.had the following transactions in 2018,its first year of operations: • Issued 33,000 shares of common stock.Stock has par value of $1.00 per share and was issued at $24.00 per share.
• Earned net income of $73,000.
• Paid no dividends.
At the end of 2018,what is the total amount of paid-in capital?

Accepted Answer

A)   $33,000
B)   $865,000
C)   $792,000
D)   $73,000

Question 7

Which of the following statements regarding income from continuing operations is incorrect?

Accepted Answer

A)   Income from continuing operations represents the part of the business that should continue from period to period.
B)   Income from continuing operations helps investors make predictions about future earnings.
C)   Income tax expense is subtracted to arrive at income from continuing operations.
D)   A gain on sale of equipment is outside the business's core business and is not part of other income.

Question 8

Adams Corporation's accounting records include the following items for the year ending December 31,2019:
  The income tax rate for the company is 25%.Prepare Adams' multi-step income statement for the year ended December 31,2019.Omit earnings per share.

Accepted Answer

None...

Question 9

Which of the following corporate characteristics is a disadvantage of a corporation?

Accepted Answer

A)   Stockholders have limited liability.
B)   A corporation has a continuous life.
C)   There is no mutual agency between the stockholders and the corporation.
D)   Earnings of a corporation may be subject to double taxation.

Question 10

Define treasury stock and provide two reasons why a corporation would purchase treasury stock.

Accepted Answer

Treasury stock is a corporation's own st...

Question 11

FASB requires that earnings per share be reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 12

A corporation declares a dividend of $0.50 per share on 18,000 shares of common stock.Which of the following is included in the entry to record the declaration?

Accepted Answer

A)   Cash Dividends is debited for $9000.
B)   Paid-In Capital in Excess of Par-Common is credited for $9000.
C)   Cash Dividends is credited for $9000.
D)   Dividends Payable-Common is debited for $9000.

Question 13

The statement of stockholders' equity ________.

Accepted Answer

A)   reports the number of shares and any changes during the year in preferred, common, and treasury stock
B)   is required to be presented along with the statement of retained earnings
C)   is not required by IFRS
D)   does not show the changes to the Retained Earnings account because that information is provided in the statement of retained earnings

Question 14

Paid-in capital consists of ________.

Accepted Answer

A)   amounts received from customers
B)   amounts raised by issuing bonds or preferred stocks
C)   earnings generated by the corporation
D)   amounts received from stockholders in exchange for stock

Question 15

Preferred stockholders ________.

Accepted Answer

A)   receive a dividend preference over common stockholders
B)   are guaranteed that they will not have a loss on their investment
C)   generally have voting rights
D)   have more investment risk compared to common stockholders

Question 16

Which of the following best describes the appropriation of retained earnings?

Accepted Answer

A)   restricting part of retained earnings for expansion or contingencies
B)   setting cash aside for expansion
C)   designating certain amounts of retained earnings for cash dividends that are required to be paid to shareholders
D)   limiting company transactions in order to boost earnings

Question 17

The 2019 balance sheet for Standard Electronics reported the following items - with 2018 figures given for comparison:  Net income for 2019 was $25,000.Compute the rate of return on common stockholders' equity for 2019.(Round your final answer to two decimal places.)

Accepted Answer

A)   4.38%
B)   10.37%
C)   11.09%
D)   4.69%

Question 18

A corporation issues 16,000 shares of its $3 stated value common shares.The issue price is $9 per share.The credit to the Common Stock account is $144,000.

Accepted Answer

A) True 
 B)False

Question 19

XD7,Inc.has 50,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding.The common stock has a $1.00 par value.The preferred stock has a $100 par value,a 5% dividend rate,and is noncumulative.On October 31,2018,the company declares the annual preferred dividend and dividends of $0.25 per share for common.Prepare the journal entry for the declaration of dividends.Omit explanation.

Accepted Answer

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Question 20

The income from continuing operations helps investors make predictions about the company's past performance.

Accepted Answer

A) True 
 B)False

Exam 13: Corporations

The income from continuing operations helps investors make predictions about the company's past performance.

Correct Answer
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Adams Corporation's accounting records include the following items for the year ending December 31,2019: The income tax rate for the company is 25%.Prepare Adams' multi-step income statement for the year ended December 31,2019.Omit earnings per share.

Correct Answer
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None...
View Answer

Correct Answer
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Which of the following best describes the appropriation of retained earnings?

Correct Answer
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Preferred stockholders ________.

Correct Answer
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A corporation declares a dividend of $0.50 per share on 18,000 shares of common stock.Which of the following is included in the entry to record the declaration?

Correct Answer
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Which of the following corporate characteristics is a disadvantage of a corporation?

Correct Answer
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Correct Answer
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View Answer

Corporations may not retire preferred stock in order to avoid paying the preferred dividends.

Correct Answer
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Correct Answer
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Which of the following items are NOT reported as part of income from continuing operations?

Correct Answer
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A corporation issues 16,000 shares of its $3 stated value common shares.The issue price is $9 per share.The credit to the Common Stock account is $144,000.

Correct Answer
verified

FASB requires that earnings per share be reported on the income statement.

Correct Answer
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The 2019 balance sheet for Standard Electronics reported the following items - with 2018 figures given for comparison: Net income for 2019 was $25,000.Compute the rate of return on common stockholders' equity for 2019.(Round your final answer to two decimal places.)

Correct Answer
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The price/earnings ratio ________.

Correct Answer
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Which of the following statements regarding income from continuing operations is incorrect?

Correct Answer
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The statement of stockholders' equity ________.

Correct Answer
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Define treasury stock and provide two reasons why a corporation would purchase treasury stock.

Correct Answer
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Treasury stock is a corporation's own st...
View Answer

Paid-in capital consists of ________.

Correct Answer
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Correct Answer
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Exam 13: Corporations

The income from continuing operations helps investors make predictions about the company's past performance.

Correct AnswerverifiedShow Answer

Adams Corporation's accounting records include the following items for the year ending December 31,2019: The income tax rate for the company is 25%.Prepare Adams' multi-step income statement for the year ended December 31,2019.Omit earnings per share.

Correct AnswerverifiedNone...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following best describes the appropriation of retained earnings?

Correct AnswerverifiedShow Answer

Preferred stockholders ________.

Correct AnswerverifiedShow Answer

A corporation declares a dividend of $0.50 per share on 18,000 shares of common stock.Which of the following is included in the entry to record the declaration?

Correct AnswerverifiedShow Answer

Which of the following corporate characteristics is a disadvantage of a corporation?

Correct AnswerverifiedShow Answer

Correct Answerverified\[\begin{array} { | l | r | r | } \hlin...View AnswerShow Answer

Corporations may not retire preferred stock in order to avoid paying the preferred dividends.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following items are NOT reported as part of income from continuing operations?

Correct AnswerverifiedShow Answer

A corporation issues 16,000 shares of its $3 stated value common shares.The issue price is $9 per share.The credit to the Common Stock account is $144,000.

Correct AnswerverifiedShow Answer

FASB requires that earnings per share be reported on the income statement.

Correct AnswerverifiedShow Answer

The 2019 balance sheet for Standard Electronics reported the following items - with 2018 figures given for comparison: Net income for 2019 was $25,000.Compute the rate of return on common stockholders' equity for 2019.(Round your final answer to two decimal places.)

Correct AnswerverifiedShow Answer

The price/earnings ratio ________.

Correct AnswerverifiedShow Answer

Which of the following statements regarding income from continuing operations is incorrect?

Correct AnswerverifiedShow Answer

The statement of stockholders' equity ________.

Correct AnswerverifiedShow Answer

Define treasury stock and provide two reasons why a corporation would purchase treasury stock.

Correct AnswerverifiedTreasury stock is a corporation's own st...View AnswerShow Answer

Paid-in capital consists of ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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None...
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Treasury stock is a corporation's own st...
View Answer

Correct Answer
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Correct Answer
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