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Exam 10: Stockholders Equity

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Question 21

True/False

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An S Corporation allows a company to enjoy limited liability as a corporation,but tax treatment as a partnership.

A) True
B) False

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Question 22

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Issued stock refers to the number of shares:

A) Outstanding plus treasury shares.
B) Authorized.
C) In the hand of stockholders.

D) A) and B)
E) A) and C)

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Question 23

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The Retained Earnings balance reported on the balance sheet typically is not affected by:

The issuer of a 5% common stock dividend (small stock dividend) to common stockholders should credit common stock for an amount equal to the

Financial information for Accessories Unlimited includes the following selected data: What is the company's dividend yield? $\begin{array} { | l r | } \hline \text { Dividends (in millions) } & \$ 75 \\\hline \text { Shares outstanding (in millions) } & 300 \\\text { Stock price } & \$ 20.00 \\\hline\end{array}$

The issuer of a 5% common stock dividend (small stock dividend) to common stockholders should debit stock dividends for an amount equal to the

Outstanding stock is the number of shares held by investors.Issued stock is the number of shares that have been sold to investors.Outstanding stock is the number of shares held by investors.Issued stock includes treasury stock.Outstanding stock excludes treasury stock.

Treasury Stock is normally reported as:

The Surf's Up issues 1,000 shares of 6%,$100 par value preferred stock at the beginning of 2017.All remaining shares are common stock.The company was not able to pay dividends in 2017,but plans to pay dividends of $18,000 in 2018.Assuming the preferred stock is noncumulative,how much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2018?

No journal entry is made to record a stock split.

A stock split has no effect on the total of any account in stockholders' equity.

The stockholders' equity section of the balance sheet shows how each equity account changed during the year.The stockholders' equity section of the balance sheet presents the balance of each equity account at a point in time.The statement of stockholders' equity shows how each account changed during the period.

The amount of retained earnings equals net income minus dividends for the current year.The amount of retained earnings equals all net income,less all dividends,since the company began operations.

Financial information for Retro Designs includes the following selected data: What is the company's earnings per share? $\begin{array} { | l r | } \hline \text { Net income (in millions) } & \$ 175 \\\hline \text { Preferred stock dividends (in millions) } & \$ 25 \\\hline \text { Common shares outstanding (in millions) } & 250 \\\hline \text { Stock price } & \$ 10.00 \\\hline\end{array}$

The number of shares outstanding is equal to the number of shares issued minus the number of shares repurchased.

Treasury stock is the repurchase of a company's own issued stock.

We can estimate the average purchase cost of treasury stock per share by dividing the treasury stock balance by the number of shares repurchased.

Retained earnings represent the earnings retained in the corporation - earnings not paid out as dividends to stockholders.

A company acquires 1,000 shares of its own $1 par common stock for $15 per share.This purchase would be recorded with a:

Advantages of the corporate form that have led to the growth of this form of business ownership include all of the following except: