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Exam 11: Corporate Reporting and Analysis

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Question 41

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Rights to purchase common stock at a fixed price over a specified period are:

A) Preferred stocks.
B) Class B stocks.
C) Stock options.
D) Stock restrictions.
E) Preemptive rights.

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Question 42

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Par value of a stock refers to the:

A) Issue price of the stock.
B) Value assigned per share by the corporate charter.
C) Market value of the stock on the date of the financial statements.
D) Maximum selling price of the stock.
E) Dividend value of the stock.

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Question 43

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A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

A corporation reported net income of $2,730,000 and paid preferred cash dividends of $120,000 during the current year. There were 600,000 weighted-average shares of common stock outstanding and the market price per common share at year-end was $58.30. Calculate the company's price-earnings ratio.

The costs of bringing a corporation into existence, including legal fees, promoter fees, and amounts paid to obtain a charter are called:

If a company resells treasury stock below the acquisition cost, a loss from the sale of treasury stock is recorded.

Retained earnings generally consist of a company's cumulative net income less any net losses and dividends declared since its inception.

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Gracey's also has $600,000 of common stock outstanding. During its first year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

What are the rights generally granted to common stockholders?

Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called:

The amount of income earned per share of a company's outstanding common stock is known as:

The following data has been collected about Keller Company's stockholders' equity accounts: $\begin{array}{|l|l|}\hline \text { Common stock } \$ 10 \text { par value } 20,000 \text { shares authorized and } 10,000\\\text { shares issued, } 9,000 \text { shares outstanding }&\$100,000\\\hline \text { Paid-in capital in excess of par value, common stock } & 50,000 \\\hline \text { Retained earnings } & 25,000 \\\hline \text { Treasury stock } & 11,500 \\\hline\end{array}$ Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury stock is:

Common stock always carries a preference for receiving dividends over preferred stock.

Gershwin Company reported net income of $428,000 and paid $8,500 in preferred cash dividends during the current year. The company had 110,000 common shares issued, and 10,000 common shares in treasury during the year. The year-end market price per common share was $41.05. Calculate the company's price-earnings ratio.

A company's board of directors votes to declare a cash dividend of $0.75 per share of common stock. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is:

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

What is a corporation? Identify the key advantages and disadvantages of corporations.

A company made an error in calculating and reporting amortization expense in 2015. The error was discovered in 2016. The item should be reported as a prior period adjustment: