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WorksheetsIssuance of Stock (Accounting 2)
Total questions: 13
Worksheet time: 7mins
When shares are issued above par value, how are amounts recorded?
Total proceeds to Capital Stock; none to APIC
Excess to Capital Stock; par value to Cash
Par value to Retained Earnings; excess to APIC
Par value to Capital Stock; excess to Additional Paid-in Capital
Match each term to its description.
Authorized shares
Maximum shares permitted by charter
Issued shares
Shares actually sold to investors
Par value
Legal stated value per share
Additional paid-in capital
Amount received above par value
Capital Stock account
Equity credited for par value issued
Which accounts are part of total paid-in capital?
Retained Earnings
Capital Stock
Additional Paid-in Capital
Treasury Stock
Which best explains “sold at a premium” for stock issuance?
Shares issued below stated par value
Shares issued at exactly par value
Shares issued for more than par value
Shares issued without any par value
Match each equity term with its description.
Common stock
Basic ownership with voting and residual rights
Preferred stock
Modified rights such as dividend preference
Additional paid-in capital
Excess received above par value per share
Total paid-in capital
Sum of par value and contributed excess
Which statement about preferred stock dividends is correct for cumulative preferred shares?
Unpaid dividends allow preferred holders to vote until paid
Unpaid dividends are forgiven and never paid in future periods
Unpaid dividends are recorded as current liabilities on the balance sheet
Unpaid dividends carry forward and must be paid before common dividends
Dividends in arrears for cumulative preferred stock should be treated how at year-end?
Recorded as a current liability and expensed
Recognized as revenue from financing activities
Added to retained earnings as income
Disclosed in notes, not recorded as liabilities
Which characteristic distinguishes common stock from preferred stock in most corporations?
Voting rights are typical for common stockholders
Guaranteed fixed dividends for common stockholders
Priority claim on assets for common stockholders
Mandatory cumulative dividends for common stockholders
Preferred stock is described as cumulative. What does this mean for unpaid dividends?
Unpaid dividends must be paid later
Unpaid dividends are permanently lost
Unpaid dividends convert to common
Unpaid dividends reduce par value
Dividends in arrears best refers to which situation?
Future declared cash dividends
Delayed common stock buybacks
Past unpaid preferred dividends
Missed interest on bonds
In liquidation, how do preferred and common stockholders usually rank for asset distribution?
Both at equal priority
Common before preferred holders
Preferred before common holders
Debt and equity treated equally
A company has 9% $100 par cumulative preferred stock with 50,000 shares outstanding. If last year’s dividend was skipped, how much must be paid to preferred holders before common dividends this year?
$5,000,000 total required
$50,000 total required
$450,000 total required
$900,000 total required
Which best defines treasury stock?
Unissued shares held for future capital raising
Authorized shares not yet issued to investors
Shares owned by outside strategic investors
Previously issued shares later reacquired by the company
