Accounting 2 Exam 1 SG

Stockholders' equity consists of which of the following?

• long-term assets

• paid-in (or contributed) capital and retained earnings

• paid-in (or contributed) capital and par value

• retained earnings and cash

• premiums and discounts

Retained earnings:

• Is the cumulative net income (and loss) not distributed as dividends to its stockholders.

• Can only be appropriated by setting aside a cash fund.

• Represent an amount of cash available to pay shareholders.

• Are never adjusted for anything other than net income or dividends.

• Represents the amount shareholders are guaranteed to receive upon company liquidation.

Mayan Company had net income of $36,520. The weighted-average common shares outstanding were 8,800. The company has no preferred stock. The company's basic earnings per share is:

• $7.30

• $36.52

• $2.90

• $4.15

• $9.61

National Insurance Company has 200,000 shares authorized, 177,000 shares issued, and 38,000 shares of treasury stock. The number of shares outstanding is:

• 200,000

• 177,000

• 162,000

• 139,000

• 23,000

Giannis Company has 100,000 shares of $10 par value common stock outstanding. Giannis declares a 10% stock dividend on July 1 when the stock’s market value is $40 per share. The stock dividend is distributed on July 20. The journal entry for the declaration of the stock dividend is:

• 
• 
• 
• 
• 

A liability for cash dividends is recorded:

• when cumulative preferred stock is sold.

• on the date of declaration.

• on the date of record.

• on the date of payment.

• for dividends in arrears on cumulative preferred stock.

A dividend preference for preferred stock means that:

• Preferred stockholders are paid their dividends before any dividends are paid to common stockholders.

• Preferred shareholders are guaranteed dividends.

• Dividends are paid quarterly.

• Common stockholders receive dividends more frequently than preferred stockholders.

• Dividends must be declared on preferred stock.

Treasury stock is classified as:

• An asset account.

• A contra asset account.

• A revenue account.

• A contra equity account.

• A liability account.

On January 1, Sustainable Energy Corporation issues bonds that have a $100,000 par value, mature in 8 years, and pay 12% interest per year. Interest payments are paid to bondholders semiannually on June 30 and December 31. How much interest does Sustainable Energy Corporation pay to bondholders every six months if the bonds are sold at par?

• $1,200

• $3,000

• $6,000

• $12,000

• $100,000

When a bond sells at a premium:

• The contract rate is above the market sale.

• The contract rate is equal to the market rate.

• The contract rate is below the market rate.

• It means that the bond is a zero-coupon bond.

• The bond pays no interest.