St. Leo ACC 202 Principles of Accounting II Accounting Test 1

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