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Ashford ACC206 Week1 Quiz

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1. Which of the following describes the term outstanding stock? (Points : 1)
The shares of stock that are held by the stockholders
The shares of stock that have been sold for the highest price
The total amount of stock that has been authorized by state law
The total amount of stock that has not been sold yet

2. Please refer to the following information for Petra Sales Company:

Common stock, $1.00 par, 200,000 issued, 180,000 outstanding
Paid-in capital in excess of par: $1,600,000
Retained earnings: $2,440,000
Treasury stock: 20,000 shares purchased at $12 per share

If Petra Sales purchases an additional 5,000 shares of treasury stock at $14 per share, the total equity of the company will go down by $70,000. (Points : 1)
True
False

3. Which of the following statements is TRUE? (Points : 1)
The purchase of treasury stock decreases assets and decreases stockholders' equity.
The purchase of treasury stock increases assets and increases stockholders' equity.
The purchase of treasury stock increases assets and decreases stockholders' equity.
The purchase of treasury stock decreases assets and increases stockholders' equity.

4. Occidental Produce Company has 40,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $0.01 par value; the preferred stock is 4% non-cumulative, with $100 par value. On October 15, 2014, the company declares a total dividend payment of 40,000. What is the amount of dividend which will be paid for each share of common stock? (Points : 1)
$ 0.80 (40,000 - [($100 °— 4%) °— $2000] = $32,000 ……. $32,000/$40,000 = $0.80
$400.00
$ 4.00
$ 1.00
None of these is correct

5. The two basic sources of equity are: (Points : 1)
common stock and bonds.
common stock and preferred stock.
paid-in capital and retained earnings.
loans from banks and gifts from donors.

6. Cash dividends affect only stockholders' equity accounts. (Points : 1)
True
False

7. If a company does not have enough cash to pay out regular dividends, but still wishes to give the shareholders something that they would consider of value, the company should consider doing a stock split. (Points : 1)
True
False

8. If preferred stock is non-cumulative, then the company does NOT need to pay dividends that were passed in previous years. (Points : 1)
True
False

9. On March 1, 2013, Parkinson Company originally issued 10,000 shares of common stock at $4.00 per share. The stock had a par value of $0.01 per share. On March 1, 2012, Parkinson distributed a 12% stock dividend; the market price at that time had dropped to $3.75 per share. Parkinson must record a loss of $300. (Points : 1)
True
False

10. Treasury stock is a corporation's own stock that it has issued and later reacquired. (Points : 1)
True
False

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