Student Gradebook Exam

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Grading Summary These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: Multiple Choice Grade Details 1. Question : Student Answer: Instructor Explanation: Points Received: Comments: A corporation must be incorporated in each state that it does business in. True False A corporation is only incorporated in a single state, namely the one that granted the corporation's charter. 1 of 1 Date Taken: Time Spent: Points Received: # Of Questions: 20 3/25/2012 08 min , 48 secs 20 / 20 (100%) # Correct: 20

2.

Question : Student Answer: Instructor Explanation: Points Received: Comments:

Treasury stock is classified on the balance sheet as an asset. True False Treasury stock is a contra-stockholders' equity account. 1 of 1

3.

Question : Student Answer: Instructor Explanation: Points Received: Comments:

Preferred stock has no voting rights. True False In exchange for other preferences, preferred stockholders give up their voting rights. 1 of 1

4.

Question : Student Answer: Instructor Explanation: Points Received: Comments:

Cash dividends are not declared or paid on treasury stock. True False Treasury Stock is not owned by stockholders, so a corporation cannot declare or pay a dividend on it. 1 of 1

5.

Question :

Stock splits reduce the total stockholders' equity.

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Student Gradebook Exam

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Student Answer: Instructor Explanation:

True False Stock splits increase the number of shares issued and outstanding and reduce the par or stated value per share, therefore they do not affect the total amount of stockholders' equity. 1 of 1

Points Received: Comments:

6.

Question :

Costs of issuing stock such as underwriting costs, accounting and legal fees, and printing costs should be debited to Additional Paid-in Capital because they are unrelated to corporate operations. True False Stock issue costs are a cost of financing and should reduce the proceeds received from the sale of the stock. 1 of 1

Student Answer: Instructor Explanation: Points Received: Comments:

7.

Question : Student Answer: Instructor Explanation: Points Received: Comments:

Treasury stock sold for more than its cost creates revenue on the income statement. True False The excess of cash proceeds over the cost of treasury stock is credited to Paid-in Capital from Treasury Stock. 1 of 1

8.

Question :

Participating preferred stock requires that if a corporation fails to pay a dividend in any year, it must make it up in a later year before paying any dividends to common stockholders. True False Cumulative preferred stock requires that if a corporation fails to pay a dividend in any year, it must make it up in a later year before paying any dividends to common stockholders. 1 of 1

Student Answer: Instructor Explanation:

Points Received: Comments:

9.

Question : Student Answer: Instructor Explanation: Points Received: Comments:

Redeemable preferred stock should be classified as a liability on the balance sheet. True False FASB Statement No. 150 requires redeemable preferred stock to be listed as a liability on the balance sheet. 1 of 1

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10. Question : Student Answer: Instructor Explanation:

The declaration of a property dividend will likely generate a gain or loss on the income statement. True False When declaring a property dividend, the corporation should restate at fair value the property it will distribute, recognizing any gain or loss as the difference between the property's fair value and carrying value at date of declaration. 1 of 1

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11. Question : Student Answer:

Which of the following is known as the pre-emptive right? To share proportionately in profits and losses. To share proportionately in management. To share proportionately in any new issues of stock of the same class. To share proportionately in corporate assets upon liquidation. The pre-emptive right protects existing stockholders from involuntary dilution of their ownership interest whenever a corporation issues new shares of stock. 1 of 1

Instructor Explanation: Points Received: Comments:

12. Question : Student Answer:

Which of the following statements related to dividends is incorrect? Distributions to owners must be in compliance with the state laws. Dividends must be declared by the Board of Directors. Dividends must comply with stock contracts as to preferences and participation.

Instructor Explanation: Points Received: Comments:

Dividends must be paid in the period declared. The payment of a dividend does not have to be in the same period as it was declared. 1 of 1

13. Question : Student Answer:

Which of the following type of stock will not increase Additional Paid-in Capital when issued? Par value stock. No-par value stock. Stated value stock. Preferred stock. No-par value stock does not increase Additional Paid-in Capital because there is no excess over and above a par or stated value to be recorded. 1 of 1

Instructor Explanation: Points Received: Comments:

14. Question : Student Answer:

Stock issued in non-cash transactions should be recorded at the: Fair market value of the stock issued. Fair market value of the property received. Par value of the stock issued.

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Instructor Explanation: Points Received: Comments:

A or B, whichever is more readily determinable. The transaction should be recorded at the fair market value of the stock issued or the fair market value of the property received, whichever is more readily determinable. 1 of 1

15. Question : Student Answer:

Under the cost method, when treasury stock is sold for more than its cost, the excess is credited to: Gain on Sale of Treasury Stock. Paid-in Capital in Excess of Par. Paid-in Capital from Treasury Stock. Retained Earnings. Under the cost method, the excess goes to Paid-in Capital from Treasury Stock. 1 of 1

Instructor Explanation: Points Received: Comments:

16. Question : Student Answer:

Which of the following are reasons why very few companies pay dividends equal to retained earnings? Contractual stipulations that require a company to retain a portion of their earnings. The desire to retain assets to finance growth. The desire to build up a cushion against future losses. All of these answers. All of the options are reasons for not paying a dividend equal to retained earnings. 1 of 1

Instructor Explanation: Points Received: Comments:

17. Question : Student Answer:

Which of the following are requirements of the declaration of a cash dividend? Sufficient cash. Sufficient retained earnings. Declaration by the Board. All of these answers. All of the options are requirements of a declaration of dividends. 1 of 1

Instructor Explanation: Points Received: Comments:

18. Question : Student Answer:

All of the following decrease Retained Earnings, except: Stock splits. Property dividends. Cash dividends. Stock dividends. Only stock splits do not decrease Retained Earnings. 1 of 1

Instructor Explanation: Points Received: Comments:

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19. Question : Student Answer:

A large stock dividend reduces retained earnings by an amount equal to the number of shares to be issued times the: Market value per share. Par value per share. Nominal value per share. Absolute value per share. Retained earnings is reduced by an amount equal to the number of shares issued times the par value per share. 1 of 1

Instructor Explanation: Points Received: Comments:

20. Question : Student Answer:

Which of the following increases the number of shares outstanding and decreases the par value per share? Large stock dividend. Small stock dividend. Stock split. Treasury stock. A stock split increases the number of shares outstanding and decrease the par value per share. 1 of 1

Instructor Explanation: Points Received: Comments:

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