Accountancy Test Questions with Answers

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CHAPTER 15

STOCKHOLDERS’ EQUITY

IFRS questions are available at the end of this chapter.

TRUE-FALSe—Conceptual

AnswerNo.Description

T1.State a corporation incorporates in.
F2.Definition of preemptive right.
T3.Common stock as residual interest.
F4.Earned capital definition.
T5.Reporting true no-par stock.
F6.Allocating proceeds in lump sum sales.
T7.Accounting for stock issued for noncash consideration.
F8.Definition of treasury stock.
F9.Reporting treasury stock under cost method.
T10.Selling treasury stock below cost.
F11.Participating preferred stock.
T12.Callable preferred stock.
T13.Restricting legal capital.
F14.Disclosing dividend policy.
F15.Affect of dividends on total stockholders’ equity.
T16.Property dividends definition.
T17.Accounting for small stock dividend.
F18.Stock splits and large stock dividends.
F19. Computing rate of return on common stock equity.
T20.Computing payout ratio.

Multiple Choice—Conceptual

AnswerNo.Description

c21.Nature of stockholders' interest.
b22.Pre-emptive right.
a23.Pre-emptive right.
bS24.Definition of legal capital.
cS25.Definition of residual owner.
c26.Nature of stockholders' equity.
d27.Sources of stockholders' equity.
d28.Classification of stockholders' equity.
d29.Allocation methods for a lump sum issuance.
b30.Capital stock issued in payment of services.
a31.Costs of issuing capital stock.
b32.Creation of "secret reserves."
aP33.Authorized shares.
dS34.Par value stock.
bS35.Legal restrictions for profit distributions.
aS36.Acquisition of treasury shares.
dP37.Treasury shares definition.
c38.Purchase of treasury stock at greater than par value. Multiple Choice—Conceptual (cont.)

AnswerNo.Description

a39.Sale of treasury stock.
a40.Reissued treasury stock at less than acquisition cost.
b41.Reissued treasury stock at greater than acquisition cost.
c42.Effect of treasury stock transactions.
c43.Preferred stock—debt features.
b44.Cumulative feature of preferred stock.
bP45.Reporting redeemable stock.
cS46.Reporting dividends in arrears.
c47.Issued vs. outstanding common stock.
b48.Timing of entry to record dividends.
c49.Shares entitled to receive a cash dividend.
c50.Accounting for a property dividend.
a51.Distribution of a property dividend.
a52.Liquidating dividend.
b53.Entry to record a liquidating dividend.
b54.Effects of a stock dividend.
b55.Effects of a stock dividend.
b56.Effect of a large stock dividend.
b57.Large stock dividend.
a58.Small stock dividend.
a59.Small stock dividend.
b60.Classification of stock dividends distributable.
b61.Effect of stock splits and stock dividends.
c62.Effect of a stock split.
b63.Disclosures in the balance sheet.
a64.Return on common stock equity calculation.
b65.Payout ratio calculation.
c66.Book value per share.
aP67.Computing book value per share.
c*68.Dividends and treasury stock.
a*69.Noncumulative preferred stock and dividends in arrears.
a*70.Disclosure of preferred dividends in arrears.

P These questions also appear in the Problem-Solving Survival Guide. S These questions also appear in the Study Guide.
*This topic is dealt with in an Appendix to the chapter.

Multiple Choice—Computational

AnswerNo.Description

a71.Composition of stockholders' equity.
b72.Calculation of total paid-in capital.
b73.Allocating proceeds in lump sum sales.
c74.Allocating proceeds in lump sum sales.
d75.Computing total paid-in capital.
b76.Allocating proceeds in lump sum sales.
c77.Allocating proceeds in lump sum sales.
Multiple Choice—Computational (cont.)

AnswerNo.Description

d78.Computing paid-in capital from treasury stock transactions.
d79.Recording purchase of treasury stock.
b...
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