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Stockholders' Equity(Quick Test #1)

Author:
Harold Averkamp, CPA, MBA

After you have answered all 40 questions, click "Grade This Quick Test" at the bottom of the page to view your grade and receive feedback on your answers.

Note: Some of the following test questions may not have been covered in the Explanation or Practice Quiz for this topic. For more insight regarding a specific question, use the search box at the top of the page.

    1. 1. An advantage of the corporate form of business is __________ liability for the stockholders.

    2. 2. The directors of a corporation are elected by the corporation’s __________.

    3. 3. The costs of forming a corporation are known as __________ costs.

    4. 4. The maximum number of shares that a corporation can issue is its __________ number of shares.

    5. 5. The difference in the number of issued shares of stock and the number of outstanding shares of stock is the number of shares of __________ stock.

    6. 6. If the shares of a corporation’s common stock have a very small amount (such as $0.10) assigned to each share, it is likely to be the share’s __________ value.

    7. 7. If a corporation has only one type of stock, it will be __________ stock.

    8. 8. The type of stock issued by some corporations that has a specified dividend rate and the owners generally do not participate in the growth of the corporation is __________ stock.

    9. 9. When a corporation declares a cash dividend, it credits the current liability account __________ __________.

    10. 10. The declaration of a cash dividend has the effect of reducing the section within stockholders’ equity known as __________ __________.

    11. 11. The section of stockholders’ equity which reports the amounts received by the corporation at the time its stock was issued has the heading __________-in or contributed capital.

    12. 12. The section of stockholders’ equity which reports the cumulative earnings minus the cumulative dividends declared is __________ __________.

    13. 13. A corporation’s own stock that has been repurchased by the corporation and has not been retired is known as __________ stock.

    14. 14. If a corporation fails to declare a regular dividend on its preferred stock with the __________ feature, it will have dividends in arrears.

    15. 15. If common stock is issued for assets other than cash, the transaction should be recorded at the fair __________ value of 1) the stock issued, or 2) the assets acquired, whichever is more clearly determinable.

    16. 16. A corporation cannot record a gain or loss on its income statement for transactions involving its own __________.

    17. 17. The preferred __________ requirement must be deducted from a corporation’s net income when computing the earnings per share.

    18. 18. An advantage of the corporation is the stockholders’ ease in __________ their ownership interest.

    19. 19. Additional paid-in capital includes amounts received in excess of the stock’s par or __________ value.

    20. 20. Preferred stockholders will receive their __________ before the common stockholders will receive theirs.

    21. 21. The cumulative amount of other __________ income is to be reported as a separate component of stockholders’ equity.

    22. 22. A disadvantage of the regular corporation (not an S-corporation) as a form of business involves income __________.

    23. 23. A stockholder will receive the same number of shares if a corporation has a 2-for-1 stock split or a __________% stock dividend.

    24. 24. A corporation whose stock is traded on a stock exchange is said to be __________ held.

    25. 25. What is the effect of a stock (not cash) dividend on the total amount of stockholders’ equity?

    26. 26. The declaration of a cash dividend will have the following effect on the normal balance of the Retained Earnings account.

    27. 27. The account Common Stock Dividend Distributable resulting from the declaration of a 10% stock (not cash) dividend is a __________.

    28. 28. What is the effect of a stock split on the total amount of stockholders’ equity?

    29. 29. A corporation will record a liability on the date a cash dividend is __________.

    30. 30. Stockholders’ or owner’s equity has this type of claim against assets.

    31. 31. Callable preferred stock is callable at the option of the __________.

    32. 32. The market value per share and the par value per share of stock will decrease when the corporation has a significant sized __________.

    33. 33. The election of a corporation’s directors is normally done by which stockholders?

    34. 34. The earnings per share calculation uses which number of common shares of stock for the accounting period?

    35. 35. A small stock dividend will transfer the __________ value of the new shares from retained earnings to paid-in capital.

    36. 36. Paid-in capital is also known as __________.

    37. 37. When a corporation acquires treasury stock, its number of shares of __________ stock will be reduced.

    38. 38. The sale of treasury stock for more than its cost will increase __________.

    39. 39. Cash dividends on most publicly traded shares of stock occur __________.

    40. 40. The name assigned to a negative balance in retained earnings is __________.

Any questions left unanswered will be marked incorrect.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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