Acc557 Financial Accounting: Week 8 Study Guide (Chapter 11) - Version 1

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Acc557 Financial Accounting
Week 8 Study Guide (Chapter 11) - Version

Multiple Choice Question 241
Dillon Corporation splits its common stock 2 for 1, when the market value is $40 per share. Prior to the split, Dillon had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock
is reduced to $20 per share.
remains the same.
is reduced to $2 per share.
is reduced to $5 per share.

Multiple Choice Question 94
Which of the following represents the largest number of common shares?
Issued shares
Authorized shares
Treasury shares
Outstanding shares

Multiple Choice Question 143
If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is
Common Stock Dividends Distributable.
Common Stock.
Paid-in Capital in Excess of Par.
Retained Earnings.

Multiple Choice Question 63
Jason Thomas has invested $200,000 in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Thomas stand to lose?
Zero.
Up to his total investment of $200,000.
The $200,000 plus any personal assets the creditors demand.
$100,000.

Multiple Choice Question 133
Vega Corporation’s December 31, 2013 balance sheet showed the following:
8% preferred stock, $20 par value, cumulative, 10,000 shares
authorized; 7,500 shares issued $150,000
Common stock, $10 par value, 1,000,000 shares authorized;
975,000 shares issued, 960,000 shares outstanding 9,750,000
Paid-in capital in excess of par—preferred stock 30,000
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 declared and paid a $48,000 cash dividend on December 15, 2013. If the company’s dividends in arrears prior to that date were $10,000, Vega’s common stockholders received
$26,000.
no dividend.
$38,000.
$22,000.

Multiple Choice Question 147
If a stockholder receives a dividend that reduces retained earnings by the fair market value of the stock, the stockholder has received a
contingent dividend.
small stock dividend.
large stock dividend.
cash dividend.

Multiple Choice Question 62
Which of the following is not true of a corporation?
It may buy, own, and sell property.
The acts of its owners bind the corporation.
It may enter into binding legal contracts in its own name.
It may sue and be sued.

Multiple Choice Question 167
When stock dividends are distributed,
Paid-in Capital in Excess of Par is debited if it is a small stock dividend.
no entry is necessary if it is a large stock dividend.
Common Stock Dividends Distributable is decreased.
Retained Earnings is decreased.

Multiple Choice Question 200
A credit balance in retained earnings represents
a claim on the aggregate assets of the corporation.
a claim on specific assets of the corporation.
the amount of stockholders' equity exempted from the stockholders' claim on total assets.
the amount of cash retained in the business.

Multiple Choice Question 121
Brown Company has 1,000 shares of 6%, $100 par 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
$600.
$6,000.
$12,000.
$0.

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.
$27,269,000.
$26,639,000.
$26,669,000

Multiple Choice Question 66
A typical organization chart showing delegation of authority would show
the controller delegating to the chief executive officer.
the chief executive officer delegating to the board of directors.
the board of directors delegating to stockholders.
stockholders delegating to the board of directors.

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

IFRS Multiple Choice Question 342
Under IFRS, the term reserves relates to each of the following except
contributed (paid-in) capital.
retained earnings.
asset revaluations.
fair value differences.

Multiple Choice Question 208
The return on common stockholders' equity is computed by dividing net income available to common stockholders by
ending total stockholders' equity.
average total stockholders' equity.
average common stockholders' equity.
ending common stockholders' equity.

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