acct

Cash dividends are initially recorded on which date?

• date of record

• date of payment

• balance sheet date

• date of declaration

Return on equity is calculated as:

• Net income divided by average market value of equity.

• Net income divided by average stockholders' equity.

• Net income divided by ending market value of equity.

• Net income divided by ending stockholders' equity.

A company issues 10,000 shares of $0.05 par value common stock for $25 per share. Which of the following is recorded at issuance?

• Credit Additional Paid-In Capital for $250,000.

• Credit Common Stock for $500.

• Credit Common Stock for $250,000.

• Credit Additional Paid-In Capital for $500.

A company issues 100,000 shares of $1 par value common stock for $17 per share. To record this transaction, the company would credit Additional Paid-in Capital for:

• $1,800,000

• $1,700,000.

• $100,000.

• $1,600,000.

Treasury stock is recorded as:

• A liability.

• A decrease in stockholders’ equity.

• An asset.

• An increase in stockholders’ equity.

How does the stockholders’ equity section in the balance sheet differ from the statement of stockholders’ equity?

• The stockholders’ equity section shows activity over a period of time, whereas the statement of stockholders’ equity is at a point in time.

• The stockholders’ equity section is more detailed than the statement of stockholders’ equity.

• The stockholders’ equity section shows balances at a point in time, whereas the statement of stockholders’ equity shows activity over a period of time.

• There are no differences between them.

An accumulated deficit is:

• A credit balance in retained earnings.

• A credit balance in stockholders’ equity.

• A debit balance in stockholders’ equity.

• A debit balance in retained earnings.

Which of the following best describes a company with a high price-earnings ratio?

• A company that pays large dividends.

• All of the other answers are typical characteristics of companies with high price-earnings ratios.

• A company with poor future prospects.

• A company whose earnings are expected to grow.

Treasury stock

• Has a normal debit balance.

• Is recorded as an investment.

• Increases total expenses.

• Increases stockholders’ equity.

Retained earnings represents:

• Total assets minus total liabilities.

• Net income minus dividends for the current year.

• Amount of cash available for paying dividends.

• All net income, less all dividends, since the company began operations.