ACCT 116A CH. 12

A stock split applies to: A. issued shares. B. common shares. C. treasury shares. D. All of these choices are correct.

A corporation has 40,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be: A. 120,000 shares. B. 160,000 shares. C. 10,000 shares. D. 40,000 shares.

Which of the following statements is not true about a 4-for-1 split? A. The market price will probably decrease. B. Par value per share is reduced to one-fourth of what it was before the split. C. A stockholder with 10 shares before the split owns 40 shares after the split. D. Total contributed capital increases.

When a corporation completes a 2-for-1 stock split: A. only the market price per share of the stock is decreased. B. only the par value per share is decreased. C. only the ownership interest of current stockholders is decreased. D. both market price per share and par value per share are decreased.

A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 2-for-1 stock split, the market value of the stock is expected to: A. fall to approximately $60. B. fall to approximately $5. C. remain the same. D. fall to approximately $25.

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 5% stock dividend on a date when the market price was $11 per share. What is the amount transferred from the retained earnings account to the paid-in capital accounts as a result of the stock dividend? A. $16,000 B. $8,000 C. $22,000 D. None of these choices are correct.

Which of the following statements is true regarding treasury stock? A. Dividends are paid on treasury stock. B. Paid-In Capital from Sale of Treasury Stock may have a debit balance. C. Paid-In Capital from Sale of Treasury Stock may be debited on the sale of treasury stock. D. None of these choices are correct.

Treasury stock shares are: A. issued shares that are held by the treasurer of the corporation. B. issued shares held by stockholders in the treasury. C. part of the total outstanding shares but not part of the total issued shares of a corporation. D. shares held by the U.S. Treasury Department.

A corporation purchases 1,000 shares of its own common stock for $4,000 on February 13. On April 13, half of the treasury stock was sold for $3,000. On April 26, the other half of the treasury stock was sold for $1,800. The entry to record the April 26 sale would include a: A. credit to Paid-In Capital from Sale of Treasury Stock for $1,200. B. debit to Paid-In Capital from Sale of Treasury Stock for $200. C. debit to Treasury Stock for $2,000. D. credit to Cash for $1,800.

The journal entry to record the sale of treasury stock might include: A. a credit to Paid-In Capital from Sale of Treasury Stock. B. a credit to Treasury Stock. C. a debit to Paid-In Capital from Sale of Treasury Stock. D. All of these choices are correct.

Treasury stock that had been purchased for $5,500 last month was reissued this month for $6,500. The journal entry to record the reissuance would include a credit to: A. Paid-In Capital from Sale of Treasury Stock for $1,000. B. Paid-In Capital in Excess of Par—Common Stock for $1,000. C. Paid-In Capital from Sale of Treasury Stock for $6,500. D. Treasury Stock for $6,500.

Treasury stock that was purchased for $2,500 is sold for $3,000. As a result of these two transactions combined: A. stockholders' equity will not change, because the amount of authorized stock has not changed. B. stockholders' equity will be increased by $500. C. stockholders' equity will be increased by $3,000. D. income will be increased by $500.

The purchase and resale of treasury stock is normally recorded using the: A. cost method. B. indirect method. C. equity method. D. direct method.

A corporation may reacquire (purchase) its own stock for the following reasons EXCEPT: A. to provide shares for resale to employees. B. to reissue as bonuses to employees. C. to support the market price of the stock. D. None of these choices are correct.

What is the total stockholders' equity based on the following account balances? Common Stock $100,000 Paid-In Capital in Excess of Par 500,000 Retained Earnings 190,000 Treasury Stock 40,000 A. $830,000 B. $600,000 C. $790,000 D. $750,000

The column headings on a statement of stockholders' equity best represent: A. the column headings on the retained earnings statement. B. the column designations in the Stockholders' Equity section of the balance sheet. C. the row designations in the Stockholders' Equity section of the balance sheet. D. None of these choices are correct.

A statement of stockholders' equity is normally prepared when: A. there is a change in paid-in capital accounts. B. there is a purchase of treasury stock. C. there is a change in stock accounts. D. All of these choices are correct.

Wave Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $5,000 on equipment. Also, during the current year, the company earned net income of $15,000 and declared cash dividends of $5,000. Compute the year-end retained earnings balance: A. $25,000 B. $35,000 C. $40,000 D. $30,000

What is the total stockholders' equity based on the following data? Common Stock $900,000 Excess of Issue Price Over Par 375,000 Retained Earnings (deficit) (50,000) A. $1,275,000 B. $1,225,000 C. $1,325,000 D. $900,000

Common Stock $500,000 Paid-In Capital in Excess of Par—C/S 50,000 Retained Earnings 190,000 Treasury Stock 40,000 A. $780,000 B. $630,000 C. $700,000 D. $740,000

Retained earnings: A. cannot have a debit balance. B. over time will have a direct relationship with the amount of cash on hand if the corporation is profitable. C. is the cumulative total of net incomes, minus net losses, and minus dividends. D. is the cumulative total of net income plus dividends.

Which of the following statements is not correct with regard to prior period adjustments? A. Prior period adjustments are errors found in a period after the error occurred. B. Prior period adjustments are reported as an adjustment to the ending balance of retained earnings in the current period. C. Prior period adjustments arise from mathematical mistakes in a previous period. D. All of these choices are correct.

All of the following are normally found in a corporation's Stockholders' Equity section except: A. Paid-In Capital in Excess of Par. B. Retained Earnings. C. Common Stock. D. Dividends Payable.

A restriction/appropriation of retained earnings: A. increases total retained earnings. B. decreases total retained earnings. C. does not change the balance of Retained Earnings. D. decreases total assets.

What is the total stockholders' equity based on the following data? Common Stock $900,000 Excess of Issue Price Over Par—Common Stock 375,000 Retained Earnings 50,000 A. $1,225,000 B. $1,325,000 C. $900,000 D. $1,275,000

In the calculation of earnings per share, preferred stock dividends are: A. subtracted in the denominator. B. not used in the calculation. C. subtracted from net income. D. added to net income.

If earnings per share changes from $3.30 to $2.60, what does this indicate about the company's profitability? A. An unfavorable change in the company's profitability is indicated. B. A favorable change in the company's profitability is indicated. C. Profitability cannot be determined from the information given. D. None of these choices are correct.

The numerator in the earnings per share calculation: A. represents only those earnings available to common stockholders. B. represents earnings available to common and preferred stockholders. C. represents only those earnings available to preferred stockholders. D. None of these choices are correct.

Corporations whose stock is traded in a public market must report earnings per share on their: A. retained earnings statement. B. Earnings per share is not reported on the financial statements. C. balance sheet. D. income statement.

All of the following statements are true regarding earnings per share (EPS) EXCEPT: A. corporations whose stock is publicly traded must report EPS on their income statements. B. EPS is calculated as (Net Income − Preferred Dividends)/Average Number of Common Shares Outstanding. C. EPS is sometimes called basic earnings per share. D. EPS cannot be calculated if a company has no preferred stock.