Term
| Who does the residual interest in a corporation belong to/ |
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Definition
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Term
| What class of stock represents the basic ownership interest? |
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Definition
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Term
| Name some rights of shareholders |
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Definition
to share proportionately in any new issues of stock of the same class
to share proportionately in profits and losses
to share proportionately in corporate assets upon liquidation |
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Term
| Some characteristics of the corporate form of the organization |
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Definition
formality of profit distribution
variety of ownership interests
capital stock or share system |
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Term
Characteristics of the corporate form of organization include all of the following except:
formality of profit distribution.
unlimited liability of stockholders
variety of ownership interests.
capital stock or share system |
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Definition
| unlimited liability of stockholders |
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Term
Which one of the following is not a right of common stockholders?
To share proportionately in any new issues of stock of the same class.
To share proportionately in all management decisions.
To share proportionately in profits and losses.
To share proportionately in corporate assets upon liquidation |
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Definition
| To share proportionately in all management decisions. |
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Term
| What two major categories is stockholder's equity generally classified into? |
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Definition
| retained earning and contributed capital |
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Term
| What does total SE represent? |
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Definition
| a claim against a portion of the total assets of an enterprise |
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Term
| additional paid-in capital is not affected by the issuance of...? |
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Definition
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Term
| What should stock issued as noncash transactions be recorded as? |
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Definition
| fair market value of the stock issued or the fair market value of the property received whichever is more readily determinable |
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Term
| Under the cost method, when treasury stock is sold for more than its cost, the excess is credited to..? |
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Definition
| paid-in capital from treasury stock |
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Term
Which of the following is true regarding treasury stock transactions by a corporation?
May increase but not decrease retained earnings.
May decrease but not increase net income
May decrease but not increase retained earnings.
May increase net income if the cost method is used. |
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Definition
| May decrease but not increase retained earnings. |
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Term
Which of the following are features of preferred stock?
preference to dividends
voting
convertible into common stock
callable at the corporation's option |
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Definition
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Term
Which of the following features of preferred stock makes the security more like debt than an equity instrument?
Redeemable
Voting
Participating
Noncumulative |
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Definition
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Term
Which of the following statements related to dividends is incorrect?
Dividends must comply with stock contracts as to preferences and participation
Dividends must be declared by the Board of Directors.
Dividends must be paid in the period declared.
Distributions to owners must be in compliance with the state laws. |
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Definition
| Dividends must be paid in the period declared. |
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Term
Which of the following are requirements of the declaration of a cash dividend?
Sufficient cash
Sufficient retained earnings
declaration by the board |
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Definition
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Term
| When a property dividend is declared, Retained Earnings is reduced by the |
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Definition
| fair value of the property |
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Term
All of the following are features of preferred stock except:
Callable at the corporation's option
voting
convertible into common stock
preference as to dividends |
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Definition
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Term
Which of the following dividends do not reduce total stockholders' equity?
Liquidating dividends
cash dividends
stock dividends
all |
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Definition
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Term
| cash dividends are paid on the basis of the number of shares |
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Definition
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Term
all of the following decrease retained earnings except:
property dividends
cash dividends
stock splits
stock dividends |
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Definition
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Term
Which of the following increases the number of shares outstanding and decreases the par value per share?
Treasury stock
large stock dividend
small stock dividend
stock split |
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Definition
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Term
| Common stock dividends distributable are reported on the balance sheet as |
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Definition
| an addition to common stock |
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Term
T/F
Under IFRS, convertible bonds are "bifurcated" —separated into the equity component (the value of the conversion option) of the bond issue and the debt component. |
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Definition
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Term
| Convertible bonds are usually converted into |
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Definition
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Term
| Convertible bonds may be exchanged to.. |
|
Definition
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Term
| The conversion of preferred stock may be recorded by the |
|
Definition
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Term
| When a bond issuer offers some form of additional consideration (a “sweetener”) to induce conversion, the sweetener is accounted for as a(n) |
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Definition
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Term
| Detachable stock warrants outstanding should be classified as |
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Definition
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Term
| The proceeds from the sale of debt with detachable stock warrants should be allocated between the two securities based on the |
|
Definition
| aggregate fair market value of the bonds and the warrants |
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Term
| Under the fair value method, compensation expense is recorded |
|
Definition
| evenly over the service period |
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Term
| Which earnings per share amounts are reported in a complex capital structure? |
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Definition
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Term
| In calculating diluted earnings per share, dividends on nonconvertible cumulative preferred stock should be |
|
Definition
| deducted from the numerator whether declared or not |
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Term
| The diluted EPS computation considers all of the following except the impact of |
|
Definition
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|
Term
| The treasury stock method of computing incremental shares applies to |
|
Definition
| stock options and warrants |
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Term
| What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively? |
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Definition
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Term
| The pre-emptive right enables a stockholder to |
|
Definition
| share proportionately in any new issues of stock of the same class |
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Term
| When a corporation issues capital stock, the least appropriate basis for valuing the transaction is the |
|
Definition
| par value of the shares issued |
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Term
| Under IFRS rules, when a company issues a convertible bond it would allocate the entire proceeds ... |
|
Definition
| between debt and equity in equal amounts based on the estimated fair values of the components |
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Term
| Under current GAAP, the proceeds from bonds issued in a package with stock warrants should not be allocated between debt and equity features when... |
|
Definition
| the warrants are nondetachable |
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Term
| How does selling treasury stock for amount greater than cost effect the B/S |
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Definition
| Increases assets and increases SE |
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Term
| How does declaring and distributing a stock split effect b/s |
|
Definition
| no effect on assets, liabilities, or SE |
|
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Term
| how does declaring and distributing a stock dividend effect b/s |
|
Definition
| no effect on assets, liabilities, or SE |
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Term
| how does declaring a cash dividend effect b/s |
|
Definition
| increase liabilities and decreases SE |
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Term
| how does paying cash dividend declared effect b/s |
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Definition
| decrease assets and liabilities |
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Term
| the issuer of a 5% c/s dividend to common stockholders would transfer an amount from RE to contributed capital equal to the |
|
Definition
| market value of the shares issued |
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Term
| If management wishes to capitalize earnings, it may issue |
|
Definition
|
|
Term
| stock options issued to employees that are still outstanding will generally |
|
Definition
| decrease diluted EPS and increase APIC |
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Term
T/F
Companie issue convertible debt in order to obtain financing at cheaper interest rate |
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Definition
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Term
| Convertible bonds may be exchanged for |
|
Definition
|
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Term
| convertible bonds are usually converted to |
|
Definition
|
|
Term
| when convertible debt is retired |
|
Definition
| either a gain or loss on retirement is recognized |
|
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Term
| when a bond issuer offers some form of additional consideration to induce conversion, the sweetener is accounted for as an |
|
Definition
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Term
T/F
In accounting for the exercise of convertible P/S for common stock, if the par value of the c/s exceeds the book value of the p/s RE is debited for the difference |
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Definition
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Term
T/F
When convertible PS is exercised, a gain or loss is recognized on the conversion of preferred stock to common. the book value method is used to account for the transaction |
|
Definition
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Term
| what will the numerator for diluted EPS calculation consist of when convertible preferred stock is being included? |
|
Definition
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Term
T/F
Nondetachable warrants do not require an allocation of the proceeds between the bonds and the warrants |
|
Definition
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Term
| When bonds are issued with detachable stock warrants, and the fair market value is known for both securities, the price is allocated between the two securities using the incremental method |
|
Definition
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Term
the treasury stock method would apply to which of the following?
stock options
treasury stock
preferred stock
convertible preferred stock |
|
Definition
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Term
| detachable stock warrants outstanding stock should be classified as |
|
Definition
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Term
the issuance of warrants arises under all of the following except:
make different types of securities more attractive to new investors
give existing stockholders a preemptive right to purchase stock
provide compensation to executives
give bondholders the preemptive right to purchase additional stock |
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Definition
| give bondholders the preemptive right to purchase additional stock |
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Term
| the proceeds from the sale of debt with detachable stock warrants should be allocated between the two securities based on the |
|
Definition
| aggregate fair value of the bonds and warrants |
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Term
| which of the following methods has the FASB historicall preferred in accounting for stock-based compensation |
|
Definition
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Term
| for which of the following securities is an allocation of the sales proceeds necessary |
|
Definition
| bonds with issued detachable warrants |
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Term
| compensation expense resulting from a compensatory stock option is generally |
|
Definition
| allocated to the periods benefited by the employee's service life to retirement |
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Term
| accounting for stock option plans must be based on |
|
Definition
|
|
Term
| under the fair value method, compensation expense is recorded.. |
|
Definition
| evenly over the service period |
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Term
t/f
in computing EPS, t/s reacquired during the year are retroactively adjusted to be reacquired as of the beginning year |
|
Definition
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Term
t/f
eps is reported for both common and ps |
|
Definition
|
|
Term
| . Which of the following is the formula for computing EPS? |
|
Definition
| (Net income – Preferred dividends) ÷ Weighted average number of shares outstanding |
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Term
t/f
. In a complex capital structure, diluted earnings per share is not reported when the securities included in the capital
structure are antidilutive. |
|
Definition
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Term
t/f
Antidilutive securities are securities that upon conversion or exercise increase earnings per share. |
|
Definition
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Term
In the diluted earnings per share computation, the treasury stock method is used for options and warrants to reflect assumed reacquisition of common stock at the average market price during the period. If the exercise price of the
options or warrants exceeds the average market price, the computation would |
|
Definition
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|
Term
| Dilutive convertible securities must be used in the computation of |
|
Definition
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|
Term
If preferred stock is cumulative, and dividends have not been declared in the past two years or in the current year,
what amount should be deducted from net income in the EPS calculation? |
|
Definition
| only the current year's dividends |
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|
Term
| Which earnings per share amounts are reported in a complex capital structure? |
|
Definition
|
|
Term
| The diluted EPS computation considers all of the following except the impact of: |
|
Definition
|
|
Term
| The treasury stock method of computing incremental shares applies to: |
|
Definition
| stock options and warrants |
|
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Term
. Complex capital structures require all of the following disclosures except:
A. a description of pertinent rights of the various securities outstanding.
B. a reconciliation of the numerators and denominators of the basic and diluted per share computations.
C. the effect given preferred dividends in determining income available to common stockholders.
D. the effect of conversions before year-end. |
|
Definition
| the effect of conversion before year-end |
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Term
t/f
A corporation must be incorporated in each state that it does business in |
|
Definition
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|
Term
| The residual interest in a corporation belongs to the |
|
Definition
|
|
Term
| In every corporation the one class of stock that represents the basic ownership interest is called |
|
Definition
|
|
Term
Which one of the following is not a right of common stockholders?
A. To share proportionately in profits and losses.
B. To share proportionately in all management decisions.
C. To share proportionately in corporate assets upon liquidation.
D. To share proportionately in any new issues of stock of the same class |
|
Definition
| B. To share proportionately in all management decisions. |
|
|
Term
Characteristics of the corporate form of organization include all of the following except:
A. capital stock or share system.
B. formality of profit distribution.
C. variety of ownership interests.
D. unlimited liability of stockholders |
|
Definition
| D. unlimited liability of stockholders |
|
|
Term
| Stockholders' equity is generally classified into two major categories: |
|
Definition
| D. retained earnings and contributed capital. |
|
|
Term
| Total stockholders' equity represents |
|
Definition
| C. a claim against a portion of the total assets of an enterprise |
|
|
Term
t/f
Costs of issuing stock such as underwriting costs, accounting and legal fees, and printing costs should be recorded
as a deferred charge and charged to expense over a period not greater than 25 years. |
|
Definition
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|
Term
| Additional paid-in capital is not affected by the issuance of: |
|
Definition
|
|
Term
| Stock issued in noncash transactions should be recorded at the: |
|
Definition
| Fair market value of the stock issued. or fair market value of the property received, whichever is more readily determinable |
|
|
Term
t/f
Treasury stock is classified on the balance sheet as an asset. |
|
Definition
|
|
Term
t/f
Treasury stock sold for less than its cost decreases net income |
|
Definition
|
|
Term
| Under the cost method, when treasury stock is sold for more than its cost, the excess is credited to: |
|
Definition
| Paid-in Capital from Treasury Stock. |
|
|
Term
| Which of the following is true regarding treasury stock transactions by a corporation? |
|
Definition
| May decrease but not increase retained earnings. |
|
|
Term
| Cumulative preferred dividends in arrears should be shown in a corporation's balance sheet as |
|
Definition
|
|
Term
All of the following are features of preferred stock except:
A. callable at the corporation's option.
B. convertible into common stock.
C. preference as to dividends.
D. voting. |
|
Definition
|
|
Term
| The most common type of preferred stock is: |
|
Definition
|
|
Term
All of the following statements are true regarding preferred stock except:
A. companies usually issue preferred stock with a par value.
B. the dividend preference for preferred stock is expressed as a percentage of the par value.
C. a company often issues preferred stock instead of debt, because of a high debt-to-equity ratio.
D. a preference as to dividends assures the payment of dividends. |
|
Definition
| . a preference as to dividends assures the payment of dividends |
|
|
Term
| Which of the following features of preferred stock makes the security more like debt than an equity instrument? |
|
Definition
|
|
Term
t/f
Cash dividends are not declared or paid on treasury stock. |
|
Definition
|
|
Term
Which of the following statements related to dividends is incorrect?
A. Distributions to owners must be in compliance with the state laws.
B. Dividends must be declared by the Board of Directors.
C. Dividends must comply with stock contracts as to preferences and participation.
D. Dividends must be paid in the period declared. |
|
Definition
| Dividends must be paid in the period declared. |
|
|
Term
| Before declaring a cash dividend, management must consider the |
|
Definition
|
|
Term
| Which of the following are requirements of the declaration of a cash dividend? |
|
Definition
A. Sufficient cash.
B. Sufficient retained earnings.
C. Declaration by the Board. |
|
|
Term
Which of the following dividends do not reduce total stockholders' equity?
A. Liquidating dividends.
B. Cash dividends.
C. Stock dividends.
D. All of the options reduce total stockholders' equity |
|
Definition
|
|
Term
t/f
The declaration of a property dividend will likely generate a gain or loss on the income statement. |
|
Definition
|
|
Term
| When a property dividend is declared, Retained Earnings is reduced by the: |
|
Definition
| fair value of the property |
|
|
Term
| Cash dividends are paid on the basis of the number of shares |
|
Definition
|
|
Term
t/f
Stock splits increase total stockholders' equity. |
|
Definition
|
|
Term
. All of the following decrease Retained Earnings, except:
A. Stock splits.
B. Property dividends.
C. Cash dividends.
D. Stock dividends. |
|
Definition
|
|
Term
Which of the following increases the number of shares outstanding and decreases the par value per share?
A. Large stock dividend.
B. Small stock dividend.
C. Stock split.
D. Treasury stock. |
|
Definition
|
|
Term
| At the date of declaration of a large common stock dividend, the entry should include |
|
Definition
| C. a debit to Retained Earnings. |
|
|
Term
t/f
Redeemable preferred stock should be classified as a liability on the balance sheet |
|
Definition
|
|
Term
| . Common stock dividends distributable are reported on the balance sheet as: |
|
Definition
|
|
