Question 1

A corporation sometimes gives shares of its stock to promoters in exchange for their services in organizing the corporation.

Accepted Answer

A) True 
 B)False

Question 2

The stockholders' equity section of a company's year-end balance sheet follows:  The preferred stock has a call price of $103 per share plus dividends in arrears. Only one year of dividends is in arrears. Calculate the book value per (1) preferred share, and (2) common share.

Accepted Answer

The answer of The stockholders' equity section of a company's...

Question 3

Stockholders' equity consists of paid-in capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 4

The price-earnings ratio reveals information about the stock market's expectations for a company's future growth in earnings.

Accepted Answer

A) True 
 B)False

Question 5

The board of directors of a corporation:

Accepted Answer

A)   Are elected by the corporate registrar.
B)   Are responsible for day-to-day operations of the business.
C)   Do not have the power to bind the corporation to contracts, due to lack of mutual agency.
D)   May not also be executive officers of the corporation, due to the separate entity principle.
E)   Are responsible for and have final authority for managing corporate activities.F) A) and D)
G) C) and D)

Question 6

A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $120, and its book value per share is $96. Its price-earnings ratio equals:

Accepted Answer

A)   9.6.
B)   19.2.
C)   12.5.
D)   10.0.
E)   8.5.F) A) and B)
G) All of the above

Question 7

A stock _________________ keeps stockholder records and prepares official lists of stockholders for stockholder meetings and dividend payments.

Accepted Answer

The answer of A stock _________________ keeps stockholder records and...

Question 8

Book value per share is often used as a starting point for:

Accepted Answer

A)   Stock valuation models.
B)   Merger negotiations.
C)   Price setting for public utilities.
D)   Loan contracts.
E)   All of these.F) B) and D)
G) B) and C)

Question 9

A company has earnings per share of $6.45. Its dividend per share is $0.20, and its market price per share is $80. Its price-earnings ratio equals 12.4.
$80/$6.45 = 12.4

Accepted Answer

A) True 
 B)False

Question 10

A corporation reports the following year-end stockholders' equity:  Determine the following:
(1) Par value for the preferred stock.
(2) Book value per share for both preferred stock and common stock assuming a call price per share of $52 for preferred and no dividends in arrears.

Accepted Answer

The answer of A corporation reports the following year-end stockholders'...

Question 11

A proxy is:

Accepted Answer

A)   A document that gives a designated agent of a stockholder the right to vote the stock.
B)   A contractual commitment by an investor to purchase unissued shares of stock.
C)   An amount of assets defined by state law that stockholders must invest and leave invested in a corporation.
D)   The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation.
E)   An arbitrary amount assigned to no-par stock by the corporation's board of directors.F) A) and D)
G) B) and E)

Question 12

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $60,000. The entry to record this exchange is:

Accepted Answer

A)   Debit Land $60,000; credit Common Stock $50,000; credit Paid-In Capital in Excess of Par Value, Common Stock $10,000.
B)   Debit Land $60,000; credit Common Stock $60,000.
C)   Debit Land $50,000; credit Common Stock $50,000.
D)   Debit Common Stock $50,000; debit Paid-In Capital in Excess of Par Value, Common Stock $10,000; credit Land $60,000.
E)   Debit Common Stock $60,000; credit Land $60,000.F) A) and E)
G) B) and D)

Question 13

Identify and describe the two main components of stockholders' equity.

Accepted Answer

Stockholders' equity consists of two mai...

Question 14

Treasury stock is classified as:

Accepted Answer

A)   An asset account.
B)   A contra asset account.
C)   A revenue account.
D)   A contra equity account.
E)   A liability account.F) A) and E)
G) C) and D)

Question 15

A transfer agent keeps stockholder records and prepares official lists of stockholders and dividend payments.

Accepted Answer

A) True 
 B)False

Question 16

Book value per common share is computed by:

Accepted Answer

A)   Multiplying the number of common shares outstanding times the market price per common share.
B)   Dividing total assets by the number of shares outstanding.
C)   Dividing stockholders' equity applicable to common shares by the number of common shares outstanding.
D)   Multiplying the number of common shares outstanding by par value per share.
E)   Dividing the number of common shares outstanding by stockholders' equity applicable to common shares.F) C) and D)
G) A) and E)

Question 17

Par value per share is the price at which a share of stock is bought or sold.

Accepted Answer

A) True 
 B)False

Question 18

Authorized stock is the total number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 19

Stock that is retired is the same as authorized and unissued stock.

Accepted Answer

A) True 
 B)False

Question 20

A stock ____________________ assists with purchases and sales of shares of stock by receiving and issuing certificates as necessary.

Accepted Answer

The answer of A stock ____________________ assists with purchases and...

Exam 13: Accounting for Corporations

Authorized stock is the total number of shares outstanding.

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A transfer agent keeps stockholder records and prepares official lists of stockholders and dividend payments.

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A proxy is:

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The board of directors of a corporation:

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The stockholders' equity section of a company's year-end balance sheet follows: The preferred stock has a call price of $103 per share plus dividends in arrears. Only one year of dividends is in arrears. Calculate the book value per (1) preferred share, and (2) common share.

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A stock ____________________ assists with purchases and sales of shares of stock by receiving and issuing certificates as necessary.

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Stock that is retired is the same as authorized and unissued stock.

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A corporation sometimes gives shares of its stock to promoters in exchange for their services in organizing the corporation.

Correct AnswerverifiedShow Answer

Identify and describe the two main components of stockholders' equity.

Correct AnswerverifiedStockholders' equity consists of two mai...View AnswerShow Answer

A corporation reports the following year-end stockholders' equity: Determine the following: (1) Par value for the preferred stock. (2) Book value per share for both preferred stock and common stock assuming a call price per share of $52 for preferred and no dividends in arrears.

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A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $60,000. The entry to record this exchange is:

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Book value per share is often used as a starting point for:

Correct AnswerverifiedShow Answer

The price-earnings ratio reveals information about the stock market's expectations for a company's future growth in earnings.

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Treasury stock is classified as:

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Book value per common share is computed by:

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A company has earnings per share of $6.45. Its dividend per share is $0.20, and its market price per share is $80. Its price-earnings ratio equals 12.4. $80/$6.45 = 12.4

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Stockholders' equity consists of paid-in capital and retained earnings.

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A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $120, and its book value per share is $96. Its price-earnings ratio equals:

Correct AnswerverifiedShow Answer

Par value per share is the price at which a share of stock is bought or sold.

Correct AnswerverifiedShow Answer

A stock _________________ keeps stockholder records and prepares official lists of stockholders for stockholder meetings and dividend payments.

Correct AnswerverifiedShow Answer

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Stockholders' equity consists of two mai...
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