answers to accounting ii quiz part 3 417380

1. Question :

Which stock offers shareholders preference in receiving dividends?

CORRECT preferred stock

2. Question :

Paid in capital includes ________

CORRECT capital stock and additional paid in capital

3. Question :

Stock that has been sold and then repurchased by the issuing corporation is called ________ stock.

CORRECT treasury

4. Question :

The owners of common stock do NOT have the specific right to ________.

CORRECT receive dividends automatically each year

5. Question :

AZ Best, Inc.’s corporate charter allows it to issue 1,500,000 shares of common stock. In 2011, its first year of business, the company sold 200,000 shares of common stock. In 2011, the company bought back 5,000 shares to be held as treasury stock. At December 31, 2011, how many shares of common stock are authorized?

CORRECT 1,500,000 shares

6. Question :

AZ Best, Inc.’s corporate charter allows it to issue 1,500,000 shares of common stock. In 2011, its first year of business, the company sold 200,000 shares of common stock. In 2011, the company bought back 5,000 shares to be held as treasury stock. At December 31, 2011, how many shares of common stock are outstanding?

CORRECT 195,000 shares

7. Question :

Cartier, Inc.’s corporate charter authorizes it to sell 1 million shares of $0.50 par value common stock. As of December 31, 2011, the company had sold 500,000 shares for $4 each. Cartier has 20,000 shares of treasury stock that cost $100,000. On the December 31, 2011 balance sheet, the number of shares issued is ________ shares.

CORRECT 500,000

8. Question : Distributions of a corporation’s earnings to its shareholders are called ________.

CORRECT dividends

9. Question :

The date of payment is the date ________.

CORRECT when cash is actually paid to the shareholders

10. Question :

Noncumulative preferred stock means that ________.

CORRECT the board of directors has the option to decide whether past unpaid dividends will be paid to preferred shareholders

11. Question :

Dividends ________.

CORRECT are the distribution of profits

12. Question :

When a company buys shares of its own stock and holds them as treasury stock, ________.

CORRECT its earnings per share will increase

13. Question :

A corporation’s distribution of new shares of stock to the corporation’s current shareholders is called a ________.

CORRECT stock dividend

14. Question :

Retained earnings is the ________.

CORRECT beginning retained earnings plus net income minus dividends

15. Question :

Team Shirts issued 20,000 shares of stock for $20 per share. This transaction increased Cash $400,000 and increased ________ $400,000.

CORRECT Paid in capital

16. Question :

PDG Corporation had a return on equity of 18%. Beginning and ending shareholders’ equity for the corporation were $570,000 and $560,000 respectively. There were 350,000 common shares and no preferred shares outstanding. What was net income for the year?

CORRECT $101,700

17. Question :

Use the following information for Equitable, Inc. to answer the following question(s). Equitable issued no new common stock and had 100,000 common shares issued and outstanding during 2011. Equitable has no preferred stock.

Net income for the year ended, December 31, 2011$370,000

Retained earnings, December 31, 2010$280,000

Retained earnings, December 31, 2011$360,000

Total shareholders’ equity at December 31, 2011$725,000

Total liabilities at December 31, 2010$105,000

Total liabilities at December 31, 2011$385,000

Total assets at December 31, 2010$750,000

What was return on equity for the year ended December 31, 2011?

CORRECT 54.0%

18. Question :

Earnings per share is ________.

CORRECT net income, minus preferred dividends, divided by the weighted average number of common shares outstanding

19. Question :

A measure of how well a company produces income with the amount of investment that common shareholders have made in the company is the ________

CORRECT return on equity

20. Question :

Risks associated with owning an investment in a company’s stock include the risk that ________.

CORRECT the company will not be successful