Home » Quizzes » Stockholders' equity » Multiple choice questions (MCQs) quiz Stockholders' equity Multiple choice questions (MCQs) quiz Posted in: Stockholders' equity (quizzes) By: Rashid Javed | Updated on: August 25th, 2024 /20 Chapter: Stockholders' equityQuiz type: Multiple choice questions (MCQs) quizNumber of questions: 20Estimated time required: 10 - 12 minutesPassing score: 60%Your result will be displayed at the end of the quiz. 1. A person who purchases common stock of a corporation is known as: preferred stockholder creditor bond holder common stockholder 2. A person who purchases preferred stock of a corporation is known as: preferred owner preferred creditor preferred stockholder preferred investor 3. Which of the following statements is not true about preferred stock? The rate of dividend is usually fixed Stockholders always have a voting right Stockholders' usually have a preference as to assets upon liquidation of the corporation Stockholders' usually have a preference as to dividends 4. Who is known as the real owner of the corporation? A creditor A preferred stockholder A common stockholder A director 5. According to current standards, mandatorily redeemable preferred stock is required to be reported as: liability equity asset none of the above 6. The shares of common and preferred stock that have been issued and outstanding are reported in which section of balance sheet? Fixes assets section Stockholders' equity section Current assets Liabilities section 7. Any unpaid dividend is carried forward to the future periods for which type of stock? Common stock Cumulative preferred stock Non-cumulative preferred stock All of the above 8. Southern company issued 5,000 shares of its $10 par value common stock. These shares were issued at a price of $25 per share. The correct journal entry to record this transaction is: Cash $125,000 Dr. and Common stock $125,000 Cr. Cash $50,000 Dr. and Common stock $50,000 Cr. Common stock $50,000 Dr., Additional paid-in capital - common stock $75,000 Dr. and Cash $125,000 Cr. Cash $125,000 Dr., Common stock $50,000 Cr. and Additional paid-in capital - common stock $75,000 Cr. 9. Which of the following is not affected as a result of stock split? Number of shares outstanding Par value per share Market value per share Par value of total shares outstanding 10. The following information has been extracted from the balance sheet of Washington Corporation as on December 31, 2017:Number of shares of common stock authorized: 200,000 sharesNumber of shares of common stock issued and outstanding: 80,000 sharesPar value per share: $10On January 1, 2018, the board of directors proposed a 7-for-5 stock split which was approved.The 7-for-5 stock split would increase the number of shares issued and outstanding by: 80,000 shares 280,000 shares 32,000 shares 112,000 shares Number of shares issued and outstanding before stock split: 80,000 sharesNumber of shares after 7-for-5 stock split: (80,000/5) × 7 = 112,000 sharesIncrease in shares after stock split: 112,000 shares – 80,000 shares = 32,000 shares 11. Which of the following cannot be a component of stockholders’ equity section of the balance sheet? Additional paid-in capital Treasury stock Long term loan Retained earnings 12. Sometime companies buyback their own shares which are known as: holding stock acquired stock common stock treasury stock 13. Which of the following is not true about treasury stock? Shares held as treasury stock are not entitled to dividends Shares held as treasury stock are not entitled to assets upon liquidation Shares held as treasury stock include shares that has been retired or cancelled Shares held as treasury stock has no voting right 14. US Company repurchased its own shares of common stock. The relevant information is given below:Number of shares repurchased: 5,000 sharesPar value per share of US Company: $10The price at which shares were repurchased: $20 per shareBased on the above information, the journal entry to record the repurchase of 5,000 shares under cost method would be: Treasury stock 50,000 Dr. and Cash 50,000 Cr. Treasury stock 100,000 Dr. and Cash 100,000 Cr. Common stock 50,000 Dr. and Cash 50,000 Cr. Common stock 100,000 Dr. and Cash 100,000 Cr. 15. Book value per share of common stock = ? Total assets/No. of shares of common stock outstanding Net income/No. of shares of common stock outstanding (Stockholders' equity - Preferred stock)/No. of shares of common stock outstanding Stockholders' equity/No. of shares of preferred stock outstanding 16. Which of the following factors may affect the market price of preferred stock? Rate of dividend Rate of interest on debt securities Features of preferred stock All of the above 17. Treasury stock is a(n): asset account liability account contra equity account none of the above 18. The following information has been extracted from the balance sheet of London Corporation as on December 31, 2017:Total stockholders’ equity: $25,000,000Preferred stock (issued and outstanding): $5,000,000Average No. of shares of common stock outstanding: 2,000,000 sharesOn the basis of above information, the book value per share of common stock is: $10.00 $15.00 $2.50 $12.50 19. Dividends in arrears on cumulative preferred stock are disclosed as: short-term liabilities long-term liabilities notes to the balance sheet deduction from stockholders' equity 20. Which of the following statements is not true about common stock of a large, publicly owned corporation? The shares may be transferred from one stockholder to another Stockholders have voting rights in the election of the board of directors Stock holders have cumulative right to receive dividends After issuance, the market value of the stock is unrelated to its par value 0% Restart quiz Help us grow by sharing our content ♡
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