Acc557 Financial Accounting: Week 8 Chapter 11 Study Guide (15 MCQs) - Version 2

Important reminder: The questions listed in this tutorial might EITHER be in a different order with your current requirement or TOTALLY DIFFERENT version of questions altogether. Please always compare and review your current requirement (questions) with the tutorial questions!

Acc557 Financial Accounting
Week 8 Chapter 11 (Version 2)

Multiple Choice Question 83
When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the
stated value of the stock.
par value of the stock.
market value of the stock.
book value of the stock.

Multiple Choice Question 74
If no-par stock is issued without a stated value, then
the corporation is automatically in violation of its state charter.
the entire proceeds are considered to be legal capital.
there is no legal capital.
the par value is automatically $1 per share.

Multiple Choice Question 170
The per share amount normally assigned by the board of directors to a small stock dividend is
the market value of the stock on the date of declaration.
the average price paid by stockholders on outstanding shares.
the par or stated value of the stock.
zero.

Multiple Choice Question 178
On January 1, Edison Corporation had 1,000,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 20% stock dividend. Market value of the stock was $15/share. As a result of this event
Edison’s Paid-in Capital in Excess of Par account increased $1,000,000.
Edison’s total stockholders’ equity was unaffected.
Edison’s Stock Dividends account increased $3,000,000.
All of these.

IFRS Multiple Choice Question 346
Under IFRS, Revaluation Surplus is part of
general reserves.
contributed capital.
share premium.
retained earnings.

Multiple Choice Question 247
In the stockholders' equity section of the balance sheet, the classification of capital stock consists of
additional paid-in capital and common stock.
common stock and preferred stock.
common stock and treasury stock.
common stock, preferred stock, and treasury stock.

Multiple Choice Question 232
Legal capital per share cannot be equal to the
par value per share of par value stock.
total proceeds from the sale of no-par value stock.
total proceeds from the sale of par value stock above par value.
stated value per share of no-par value stock.

Multiple Choice Question 123
Ranier Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Ranier issues 5,000 shares of preferred stock for land with an asking price of $600,000 and a market value of $540,000, which of the following would be the journal entry for Ranier to record?
Land 540,000
Preferred Stock 500,000
Paid-in Capital Excess of Par-Preferred 40,000

Land 600,000
Preferred Stock 500,000
Paid-in Capital in Excess of Par-Preferred 100,000

Land 500,000
Preferred Stock 500,000

Land 540,000
Preferred Stock 540,000

IFRS Multiple Choice Question 350
The accounting is essentially the same under IFRS and GAAP for
prior period adjustments.
revaluation surplus.
treasury stock.
All of these.

Multiple Choice Question 214
Vega Corporation’s December 31, 2013 balance sheet showed the following:
8% preferred stock, $20 par value, cumulative, 10,000 shares authorized; 8,500 shares issued $170,000
Common stock, $10 par value, 1,000,000 shares authorized; 950,000 shares issued, 940,000 shares outstanding 9,500,000
Paid-in capital in excess of par—preferred stock 34,000
Paid-in capital in excess of par—common stock 13,500,000
Retained earnings 3,750,000
Treasury stock (15,000 shares) 315,000
Vega’s total stockholders’ equity was
$46,690,000.
$26,669,000
$26,639,000.
$27,269,000.

Multiple Choice Question 212
Assume that all balance sheet amounts for Marley Company represent average balance figures.
Stockholders’ equity—common $150,000
Total stockholders’ equity 200,000
Sales 100,000
Net income 27,000
Number of shares of common stock 10,000
Common stock dividends 10,000
Preferred stock dividends 4,000
What is the return on common stockholders’ equity ratio for Marley?
8.7%
18.0%
15.3%
11.3%

Multiple Choice Question 153
Which of the following statements regarding the date of a cash dividend declaration is not accurate?
The board of directors formally authorizes the cash dividend.
The corporation is committed to a legal, binding obligation.
A liability account must be increased.
The dividend can be rescinded once it has been declared.

Multiple Choice Question 126
Which of the following is not a right or preference associated with preferred stock?
Preference to corporate assets in case of liquidation
To receive dividends in arrears before common stockholders receive dividends
The right to vote
First claim to dividends

Multiple Choice Question 122
Era Company has 3,000 shares of 5%, $100 par non-cumulative preferred stock outstanding at December 31, 2013. No dividends have been paid on this stock for 2012 or 2013. Dividends in arrears at December 31, 2013 total
$30,000.
$0.
$1,500.
$15,000.

Multiple Choice Question 114
Treasury stock should be reported in the financial statements of a corporation as a(n)
liability.
deduction from total paid-in capital.
investment.
deduction from total paid-in capital and retained earnings
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