FAR — Financial Accounting & Reporting — Quiz 63

Questions in this quiz (10)

1. Which of the following best describes treasury stock?

   • Shares issued to creditors
   • Shares repurchased by the corporation
   • Shares authorized but not issued
   • Shares converted to bonds

2. Which account is debited when a company purchases treasury stock?

   • Treasury stock
   • Cash
   • Retained earnings
   • Revenue

3. Which account is credited when treasury stock is purchased?

   • Cash
   • Retained earnings
   • Revenue
   • Accounts payable

4. Which financial statement shows changes in retained earnings?

   • Balance sheet
   • Statement of retained earnings
   • Income statement
   • Statement of cash flows

5. Which formula calculates ending retained earnings?

   • Beginning retained earnings + Net income − Dividends
   • Net income − Beginning retained earnings
   • Revenue − Expenses
   • Beginning retained earnings + Dividends

6. Which of the following increases stockholders' equity?

   • Dividend payments
   • Net loss
   • Net income
   • Treasury stock purchase

7. Which transaction decreases total stockholders' equity?

   • Issuing stock
   • Net income
   • Purchasing treasury stock
   • Revenue increase

8. Which ratio measures profitability relative to shareholders' investment?

   • Debt ratio
   • Return on equity
   • Current ratio
   • Asset turnover

9. Which formula calculates return on equity?

   • Net income ÷ Average stockholders' equity
   • Net income ÷ Total assets
   • Revenue ÷ Expenses
   • Assets ÷ Liabilities

10. Which of the following best describes preferred stock?

    • Stock with guaranteed voting rights
    • Stock with dividend priority
    • Stock issued only to management
    • Stock repurchased by company