WorksheetsRecap
Total questions: 15
Worksheet time: 12mins
Watson Company has provided the following data about its common stock:
• Par value is $1 per share
• 10,000,000 authorized shares
• 4,300,000 shares are outstanding
• 4,700,000 shares are issued
How many shares of treasury stock are there?
0
400,000
5,300,000.
5,700,000.
Which of the following statements is correct?
A 2-for-1 common stock split decreases both earnings per share and total stockholders' equity.
A 10% common stock dividend decreases both earnings per share and total stockholders' equity.
A 2-for-1 common stock split increases both the number of common shares outstanding and total stockholders' equity.
A 30% common stock dividend increases the number of common shares outstanding and does not affect total stockholders' equity
Which of the following would be reported in the investing activities section of a cash flow statement?
Cash received from customers.
Cash received from the issue of common stock.
Cash paid to repay a bank loan.
Cash paid to acquire common stock of another company.
Which of the following not be reported as a financing cash flow?
Issuing common stock for cash.
Paying back the principal of a loan.
Purchasing treasury stock.
Purchasing a building in cash.
Trenton Company has provided the following information: • Net income, $240,000 • Preferred shares issued, 6,000 • Weighted average number of shares of common stock issued, 24,000 • Cash dividends declared and paid on common stock, $30,000 • Market price per share, $36 • Weighted average number of treasury shares of common stock, 4,000. What is Trenton's earnings per share?
$8.00
$7.00.
$10.50.
$12.00.
Which of the following does not correctly describe the effect of Mylan Company declaring and distributing a 2-for-1 common stock split?
Mylan's current ratio remained the same.
Mylan's return on equity ratio remained the same.
Mylan's debt-to-equity ratio remained the same.
Mylan's earnings per share remained the same.
Which of the following best describes the balance sheet?
It includes a listing of assets at their market values.
It includes a listing of assets, liabilities, and stockholders' equity at their market values.
It provides information pertaining to a company's assets and the claims against sources
financing for those assets.
It provides information pertaining to a company's liabilities for a period of time.
Which of the following would immediately cause a change in a corporation's retained earnings?
Net income or net loss and declaration of dividends.
Declaration of dividends and issuance of common stock to new stockholders.
Net income and issuance of stock to new stockholders.
Declaration of dividends and purchase of new machinery.
Which of the following best describes the expense recognition principle?
It requires expenses to be recorded when they are paid for.
It requires expenses to be recorded when incurred to generate revenues.
It requires expenses to be recorded consistent with the cash basis of accounting.
It does not allow expenses to be recorded if they are incurred prior to being paid.
A machine, acquired for a cash cost of $15,000, is being depreciated on a straight-line basis of $2,700 per year. The residual value was estimated to be 10% of cost. The estimated useful life is:
4 years
5 years
3 years
6 years.
Under what conditions would a company most likely adopt the double declining balance method for financial reporting?
The company wants to maximize the total depreciation expense over the life of the asset.
The company wants to maximize the asset’s book value in the earlier years of the asset’s life.
The company has high technology, robotic equipment in its plant that becomes obsolete quickly and declines in utility to the company more rapidly in the early years of the assets’ lives.
The company wants to maximize its net income during the earlier years of the asset’s life.
Which of the following statements is incorrect?
Ordinary repairs and maintenance are recurring in nature.
Ordinary repairs and maintenance decrease net income
Additions and improvements to a depreciable asset occur infrequently.
Capital expenditures decrease assets.
Lena Company has provided the following data (ignore income taxes): 2016 revenues were $99,000; 2016 expenses were $47,800; Dividends declared and paid during 2016 totaled $9,500.
Total assets at Dec. 31, 2016 were $177,000
Total liabilities at Dec 31, 2016 were $89,000
Common stock at Dec. 31, 2016 was $28,000. Which of the following is correct?
2016 net income was $41,700
Total stockholders’ equity at Dec. 31, 2016 was $236,000
Retained earnings at Dec. 31, 2016 were $60,000
Retained earnings at Dec. 31, 2016 were $41,700.
Rye Company has provided the following information:
• Number of issued common shares, 225,000 • Net income, $500,000 • Number of authorized common shares, 400,000
• Number of treasury shares, 25,000.
What is Rye's earnings per share (EPS)?
$2.50
$1.25
$2.00
$1.33
Which of the following is not considered to be a recordable transaction?
Signing a contract to have an outside cleaning service clean offices nightly.
Paying employees their wages.
Selling stock to investors.
Buying equipment and agreeing to pay a note payable and interest at the end of a year.
