Stockholders' Equity Quiz and Test | AccountingCoach
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Stockholders' Equity(Practice Quiz)

Author:
Harold Averkamp, CPA, MBA

For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. For fill-in-the-blank questions, press or click on the blank space provided.

If you have difficulty answering the following questions, learn more about this topic by reading our Stockholders' Equity (Explanation).


1.
To start a corporation in the U.S., it is necessary to file an application in one of the states. The legal document that the state approves is the __________ articles of incorporation.
2.
One of the advantages of the corporation form of business as opposed to a partnership form is the ease of transferring __________ ownership.
3.
At a corporation, Assets minus Liabilities is __________ Stockholders' Equity.
4.
Shares of stock that have been issued and have not been reacquired by the issuing corporation are called __________ outstanding shares.
5.
If a corporation has issued only one type of stock, it is __________ common stock.
6.
The type of stock that gets its dividend before the common stock gets its dividend is called __________ preferred stock.
7.
The holders of __________ common stock elect the corporation's board of directors.
8.
The par value of __________ common stock usually has no economic significance.
9.
The dividend on preferred stock is often expressed as a percentage. To calculate the annual dividend on preferred stock, you multiply the percentage times the __________ par value of the preferred stock.
10.
If a corporation issues 10% Preferred Stock $100 Par on a day when the financial markets demand 9%, this corporation's 10% Preferred Stock will sell for __________ more than its par value.
11.
If a common stock does not have a par value or a stated value, the entire proceeds from issuing the stock is credited to one account entitled __________ Common Stock.
12.
Stockholder's equity is subdivided into two major sections:
__________
paid-in capital
and
__________
retained earnings
.
13.
The net income of a corporation is closed to the __________ Retained Earnings account.
14.
Dividends declared by a corporation reduce the __________ retained earnings section of stockholders' equity.
15.
Dividends appear as an expense on the corporation's income statement.

True

Wrong.
Dividends are a distribution of earnings, they are not an expense.

False

Right!
16.
If the board of directors does not declare the regular quarterly divided on its common stock, the corporation's liabilities will include the omitted dividend.

True

Wrong.
Dividends become liabilities only if the board of directors declares them.

False

Right!
17.
The __________ declaration date is the date on which the corporation records a liability for its quarterly dividend.
18.
The __________ record date determines which stockholders will receive a declared dividend.
19.
If a corporation declares a small stock dividend, the account that will be reduced by a debit entry is __________ Retained Earnings.
20.
A stockholder will have the same number of shares after a 3-for-2 stock split or after a __________ 50%% stock dividend.
21.
A corporation's own shares of stock that have been reacquired from its stockholders but have not been retired are called __________ treasury stock.
22.
The account, Treasury Stock, will have either a zero balance or a __________ debit (debit, credit) balance.
23.
If a share of treasury stock is sold for more than its cost, the difference is credited to __________ Paid-in Capital from Treasury Stock.
24.
Treasury stock sales can result in a loss on the corporation's income statement.

True

Wrong.
A corporation cannot report a loss (or a gain) on its income statement from the sale of its treasury stock.

False

Right!
25.
If preferred stockholders have the opportunity to receive more than the stated dividend percentage, the stock is described as __________ participating preferred stock.
26.
Dividends in arrears occur only on __________ cumulative preferred stock.
27.
Dividends in arrears are reported in the financial statements in the __________ notes or footnotes.
28.
If a preferred stock can be exchanged for a stated number of common shares, it is referred to as __________ convertible preferred stock.
29.
The book value per share of preferred stock is its
__________
call price
plus any dividends in
__________
arrears
.
30.
Earnings per share means earnings per share of __________ common stock.
31.
A debit balance in Retained Earnings will be described in the stockholders' equity section of the balance sheet as __________ deficit or accumulated deficit.
32.
The __________ board of directors of a corporation declares the dividends.
33.
The directors of a corporation appoint __________ officers to carry out the corporation's policies and directives.
34.
When a small stock dividend is declared, the __________ market value of the new shares is transferred from Retained Earnings to paid-in capital accounts.
35.
A separate portion of stockholders' equity that reports certain gains and losses on hedges, foreign currency translations, and pension liabilities that were not part of net income shown on the income statement is __________ accumulated other comprehensive income.

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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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