Question

1. Which of the following does not accurately describe Total Stockholder’s Equity?
   1. Represents the portion of business assets not claimed by creditors
   2. Represents the value of ownership for stockholders
   3. Includes common stock and retained earnings
   4. Represents how much capital has been generated through issuance of stock
2. All of the following accurately describe retained earnings except…
   1. The portion of total equity that is earned through profitable operations
   2. The accumulation of undistributed net income
   3. The portion of equity that is generated through issuing stock
   4. The portion of equity from which dividends are distributed/paid
3. All of the following accurately describe the common stock account except….
   1. Is the source for distribution and payment of dividends
   2. Represents the portion of equity generated through issuance of stock
   3. Is a contributed form of capital
   4. Is added to Retained Earnings to determine Total Stockholder’s Equity
4. Which of the following statements about outstanding stock is not true?
   1. Represents shares held by stockholders
   2. Includes treasury stock
   3. Represents 100% ownership in corporate capital
   4. Is the different between total shares issued less any shares in treasury stock
5. All of the following accurately describe common stock except:
   1. Carries a fixed dividend rate
   2. Carries voting rights
   3. Represents ownership in corporate capital
   4. Is not typically issued at par value
6. All of the following accurately describe preferred stock except:
   1. Carries a fixed dividend rate
   2. Receives preference in distribution of dividends and/or distribution of assets upon liquidation
   3. Carries voting rights
   4. Is typically issued at par value
7. Which of the following statements about par value is true?
   1. Directly tied to market value of stock
   2. Directly tied to issue price of stock
   3. Determines amount of dividends that will be paid on common stock
   4. Is a nominal, arbitrary amount applied to shares of stock; unrelated to actual stock value or price
8. When recording for issuance of stock, all of the following accurately describe this process except:
   1. Different classes of stock are recorded in separate stock accounts
   2. Par value is recorded separately from the premium on stock issuance
   3. Premium on stock issuance is recognized as income/profit
   4. Cash and total stockholder’s equity will both increase as a result of this transaction
9. Which of the following statements about treasury stock is not accurate?
   1. Treasury stock represents ownership in corporate capital
   2. A company may buy back shares of stock and hold them in treasury as a way to allow investors to gain some cash back from their investment
   3. A company may hold shares of stock in treasury to ensure enough shares of stock are not available for trade on the market to avoid a takeover
   4. A company may buy back shares of stock to decrease outstanding shares, thus increase earnings per share
10. Which of the following statements about cash dividends is inaccurate?
    1. Dividends are issued to common stockholders based on shares held
    2. Dividends are issued to preferred stockholders based on a fixed dividend rate
    3. Dividends are paid from contributed capital/stock accounts
    4. Dividends are paid from earned capital/retained earnings
11. Which of the following statements about stock dividends is inaccurate?
    1. Stock dividends will increase the number of issued and outstanding shares
    2. May dilute market value depending on the size of the stock dividend issued
    3. Size of stock dividend issued may require reporting at different values
    4. Will result in an overall decrease in stockholder’s equity
12. The characteristics of a corporate structure would not include:
    1. Owners are liable for business debt obligations
    2. Recognized as a separate legal entity of the state
    3. Earnings are subject to double taxation
    4. Owners are referred to as stockholders

Answer 1

1-	Which of the following does not accurately describe Total Stockholder’s Equity	Answer is A	Represents the portion of business assets not claimed by creditors	rest all represent shareholders equity
2-	All of the following accurately describe retained earnings except	Answer is C	The portion of equity that is generated through issuing stock	rest all represent the retained earning
3-	All of the following accurately describe the common stock account except	Answer is A	Is the source for distribution and payment of dividends	rest all represent the common stock
4-	Which of the following statements about outstanding stock is not true	Answer is C	Represents 100% ownership in corporate capital	rest all statement represent the outstanding stock
5-	All of the following accurately describe common stock except:	Answer is A	Carries a fixed dividend rate	rest all statements define the term common stock
6-	Which of the following statements about par value is true	Answer is D	Is a nominal, arbitrary amount applied to shares of stock; unrelated to actual stock value or price	rest of the statements are not related to par value
7-	When recording for issuance of stock, all of the following accurately describe this process except:	Answer is C	Premium on stock issuance is recognized as income/profit	rest all are the part of issue process
8-	Which of the following statements about treasury stock is not accurate	Answer is B	A company may buy back shares of stock and hold them in treasury as a way to allow investors to gain some cash back from their investment	rest of the statements are related to treasury stock
9-	Which of the following statements about cash dividends is inaccurate	Answer is C	Dividends are paid from contributed capital/stock accounts
10-	Dividends are paid from contributed capital/stock accounts	Answer is D	Will result in an overall decrease in stockholder’s equity	rest statements are valid in regard of stock dividend
11-	The characteristics of a corporate structure would not include	Answer is A	Owners are liable for business debt obligations	rest statements are valid in regard of corporate structure