ABC Company had 200,000 Shares of Common Stock
outstanding with a $2 par value and retained earnings of
$90,000. In 2009, the company split the stock for 2:1. Which
of the following would result from the stock split?
a. Retained Earnings will decrease as a result of the stock split.
b. A total of 400,000 shares of common stock will be
1.
outstanding.
c. The par value would become $4 per share.
d. Retained Earnings will increase as a result of the stock split.
e. None of the above
Answer is b
Which of the following is a recurring item?
a. Error of a prior period
b. Equity in earnings of nonconsolidated subsidiaries
c. Extraordinary loss
2.
d. Cumulative effect of change in accounting principle
e. Discontinued operations
Answer is b
If Investor Company owns 20% of the stock of Investee
Company and Investee Company reports profits of $100,000,
then Investor Company reports equity income of:
a. $80,000.
b. $20,000.
3.
c. $40,000.
d. $60,000.
e. None of the answers are correct.
Answer is $20000
4. Changes in account balances of Gross Flowers during 2020
were as follows:
Increa
se
Assets $420,
000
Liabilities 125,0
00
Capital stock 100,0
00
Additional paid-in 140,0
capital 00
Retained Earning ?
Assuming that there were no charges to retained earnings
other than dividends of $62,000, the net income for 2010 was:
a. ($7,000)
b. $55,000
c. $117,000
d. $257,000
e. none of the answers are correct
Change in SHE = 420000 – 125000 = 295000
Change in RE = 295000 – 100000 -140000 = +55000
NI = 62000 + 55000 117000
Answer is c
Anchor Company has 1,000,000 shares of common stock with
a par value of $5. Additional paid-in capital totals $5,000,000
and retained earnings is $8,000,000. The directors declare a
10% stock dividend when the market value is $15. The
reduction of retained earnings as a result of the declaration
will be:
a. $0.
5.
b. $500,000.
c. $800,000.
d. $1,000,000.
e. $1,500,000.
1000000 x .1 = 100000 x 15 = 1500000
Answer is e
6. Andromeda Industries had 300,000 shares of common stock
with a $3 par value and retained earnings of $180,000 at
January 1, 2011. In 2011, the stock was split 3 for 1. In 2010,
earnings per share were $1.80. Which of the following would
NOT result from the stock split?
a. The new shares would total 900,000.
b. The total amount in the capital stock account would remain the
same.
c. The par value would become $1.
d. Retained earnings would be reduced.
e. The earnings per share for 20 years prior to the split would be
reduced.
Answer is d
Gross profit is the difference between:
a. net income and operating income
b. revenues and expenses
7. c. sales and cost of goods sold
d. income from continuing operations and discontinued operations
e. gross sales and sales discounts
Answer is C
A feature common to both stock splits and stock dividends
is……..
a) A transfer to earned capital of a corporation.
b) That there is no effect on total stockholders' equity.
8.
c) An increase in total liabilities of a corporation.
d) A reduction in the contributed capital of a corporation.
Answer is b
.The stockholders' equity of Anamanda Company at September 30, 2008, is presented
below:
Common Stock, par value $10, authorized 500,000 shares;
9. 200,000 shares
issued and outstanding $2,000,000
Paid-In Capital in Excess of Par 300,000
Retained Earnings 1,300,000
$3,600,000
On October 1, 2008, the Board of Directors of Anamanda declared a 10% stock
dividend to be distributed on November 10. The market price of the common stock
was $15 on October 1 and $17 on November 10. What is the amount of the charge to
retained earnings as a result of the declaration and distribution of this stock dividend?
a. $0
b. $200,000
c. $300,000
d. $340,000
e. $750,000
Answer is C
Canco Inc. owns 70% of Supersonics and consolidates this
subsidiary. In 2012, Supersonics earned $100,000 after tax
and Canco earned $1,000,000. Without consideration of
10. minority interests, the stockholders' equity of Supersonics at
the end of 2012 was $1,200,000, The minority share of
earnings in 2012 will be
…………………………………………………………………………………………..
Minority share: 30% * $100,000 = $30,000
11. a. The following relate to Owens data in 2010. What is the
ending inventory?
Purchases $580,000
Beginning inventory 80,000
Purchase returns 8,000
Sales 900,000
Cost of goods sold 520,000
1. $150,000
2. $132,000
3. $152,000
4. $170,000
5. $142,000
80000 + (580000 – 8000) – x = 520000 Then x = 652000 – 520000 =
132000
Answer is 2
