1) What would be the impact on the accounting equation when a company acquires treasury stock?

a)Decrease assets and increase stockholders' equity.

b)Decrease assets and decrease stockholders' equity.

c)No effect on the accounting equation.

d)Increase assets and increase stockholders' equity.

2) The statement of stockholders' equity shows:

A)More information than the stockholders' equity section in the balance sheet.

B)Less information than the stockholders' equity section in the balance sheet.

C)Only the beginning balance in each stockholders' equity account.

D)Only the ending balance in each stockholders' equity account.

3)Over the first four years of the company's life, the company earned the following net income (loss): $6,000; $3,000; $6,000, and ($2,000). If the company's ending retained earnings is $10,000 after year 4, what is the average amount of dividends paid per year?

A)$7,000.

B)$750.

C)$0.

D)$3,000.

4)Jade Jewelers issued 15,000 shares of $1 par value stock for $20 per share. What is true about the journal entry to record the issuance?

A)Debit Additional Paid-In Capital $285,000.

B)Credit Cash $300,000.

C)Credit Common Stock $15,000.

D)Credit Common Stock $300,000.

5)The balance sheet of California Clothing reports total equity of $600,000 and $700,000 at the beginning and end of the year, respectively. Net income and sales for the year are $65,000 and $1,300,000, respectively. What is California Clothing's return on equity?

A)200%.

B)10%.

C)20%.

D)5%.

6)Large stock dividends and stock splits are issued primarily to:

A)Lower the trading price of the stock per share.

B)Increase the number of authorized shares.

C)Increase the number of outstanding shares.

D)Increase legal capital.

7)The entry to record a large stock dividend would include a:

A)Debit to Stock Dividends

B)Debit to Additional Paid-in Capital

C)Debit to Common Stock

D)Credit to Stock Dividends

8)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 cumulative, how much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2018?

A)$9,000 to preferred stockholders and $9,000 to common stockholders.

B)$18,000 to preferred stockholders and $0 to common stockholders.

C)$12,000 to preferred stockholders and $6,000 to common stockholders.

D)$6,000 to preferred stockholders and $12,000 to common stockholders.

10)Authorized common stock refers to the total number of shares:

A)Issued.

B)Outstanding.

C)That can be issued.

D)Issued and outstanding.

11) Roberto Designers was organized on January 1, 2018. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2018, Roberto had the following transactions relating to stockholders' equity: Issued 10,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8). What is the balance in the Treasury Stock account at the end of 2018?

A)$160,000.

B)$250,000.

C)$260,000.

D)$30,000.

12)The corporation's own stock that has been issued and then repurchased by the company is referred to as:

A)Treasury Stock.

B)Authorized Stock.

C)Preferred Stock.

D)Common Stock.

13)California Adventures issues 5,000 shares of 8%, $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 $100,000 in 2018. Assuming the preferred stock is cumulative, how much of the $100,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2018?

A)$80,000 to preferred stockholders and $20,000 to common stockholders.

B)$40,000 to preferred stockholders and $60,000 to common stockholders.

C)$100,000 to preferred stockholders and $0 to common stockholders.

D)$20,000 to preferred stockholders and $80,000 to common stockholders.

14)All publicly held corporations are regulated by what government organization?

A)The Accounting Principles Board.

B)The Securities and Exchange Commission.

C)The Commission on Accounting Procedures.

D)The Financial Accounting Standards Board.

15) The issuer of a 100% common stock dividend (large stock dividend) to common stockholders should credit common stock for an amount equal to the

A)Par value of the shares issued.

B)Minimum legal requirements.

C)Book value of the shares issued.

D)Market value of the shares issued.

16)Financial information for Retro Designs includes the following selected data:

Net income (in millions)	$175
Preferred stock dividends (in millions)	$25
Common shares outstanding (in millions)	250
Stock price	$10.00

What is the company's price-earnings ratio?

A)14.3.

B)15.0.

C)16.7.

D)5.7.

17)Which of the following statements regarding the corporate form of business is correct?

A)All of these.

B)Disadvantages are that the business is subject to government regulations and double taxation on its income.

C)The disadvantages are that generating capital is difficult and that owners have limited liability.

D)One disadvantage is that ownership is easy to transfer.

18)Which of the following is TRUE regarding the accounting for treasury stock?

A)The purchase and sale of treasury stock has no impact on the income statement.

B)Treasury stock is reported on the balance sheet in the equity section.

C)Treasury stock represents a negative equity account.

D)All of these.

19)Which of the following financing alternatives has the highest preference of payment in a case where the company liquidates its assets?

A)They have equal preference.

B)Bonds.

C)Common Stock.

D)Preferred Stock.

20)The par value of common stock represents:

A)The market value of a share of stock.

B)The legal capital per share of stock assigned when the corporation was first established.

C)The amount received when the stock was issued.

D)The liquidation value of a share.