actual test multiple choice

Question 1

each of the following decreases total stockholders equity except a

Answer 1

stock dividend

Question 2

the date of which a cash dividend becomes a binding legal obligation is on the

Answer 2

declaration date

Question 3

dividends payable is classified as a

Answer 3

current liability

Question 4

indicate the respective effects of the declaration of a cash dividend on the balance sheet sections

TA | TL | TOTAL STOCKHOLDERS RQUITY

Answer 4

Total Assets: No Change
Total Liabilities: Increase
Total Stockholders equity: decrease

Question 5

the per share amout normally assigned by the board of directors to a small stock dividend is

Answer 5

the par or stated value of the stock

Question 6

which of the following show the proper effect of a stock split and a stock dividend

Answer 6

Par Value per share; Stock Split:Decrease Stock Dividend: No change

Question 7

common stock dividends distributable is classified as an

Answer 7

liability

Question 8

the return on common stockholders equity is computed y dividing net income available to common stockholders by

Answer 8

average common stockholders equity

Question 9

income statements for corporations are the same as the statements for proprietorship except for the reporting of

Answer 9

income tax expense

Question 10

jackson company is a publicly held corporation whose $1 par value stock is traded at $64 per share. The company issued 3,000 shares of stock to acquire land recently advertised at $200,000. When recording this transaction, Barton will

Answer 10

debit land for 192,000

Question 11

Jackson company is a publicly held corporation whose $1 par value stock is traded at $64 per share. The company issued 3,000 shares of stock to acquire land recently advertised at $200,000. When recording this transaction, Barton will

Answer 11

debit land for 192,000

Question 12

In the financial statements, organization costs appears

Answer 12

in the income statement

Question 13

which of the following represents the largest number of common shares

Answer 13

Authorized shares

Question 14

dividends in arrears on cumulative preferred stock

Answer 14

must be paid before common stockholders can receive a dividend.

Question 15

the acquisition of treasury stock by a corporation

Answer 15

decreases its total assets and stockholders equity

Question 16

treasury stock is an

Answer 16

contra stockholders equity account

Question 17

information that is not generally reported for each class of stock on the balance sheet is

Answer 17

the market value

Question 18

which of the following is not an advantage of issuing bonds instead of common stock

Answer 18

earnings per share on common stock may be lower

Question 19

bonds that may be exchanged for common stock at the option of the bondholders are called

Answer 19

convertible bonds

Question 20

The interest rate investors demand for loaning funds is the

Answer 20

market interest rate

Question 21

if the market interest rate is greater than the contractual interest rate, bonds will sell

Answer 21

at a discount

Question 22

in the balance sheet, the account, premium on bonds payable is

Answer 22

added to bonds payable

Question 23

thirty $1,000 bonds with a carrying value of $39,600 are converted into 4,000 shares of $5 par value common stock. The common stock had a market value of $9 per share on the date of conversion. The entry to record the conversion is

Answer 23

DB Bonds Payable 30,000
Db Premium on Bonds Payable
Cr Common Stock 20,000 (4,000 x 5)
Cr Paid in capital in excess of par

Question 24

thirty $1,000 bonds with a carrying value of $39,600 are converted into 4,000 shares of $5 par value common stock. The common stock had a market value of $9 per share on the date of conversion. The entry to record the conversion is

Answer 24

DB Bonds Payable 30,000
Db Premium on Bonds Payable 9,600
Cr Common Stock 20,000 (4,000 x 5)
Cr Paid in capital in excess of par 19,600