FAR — Financial Accounting & Reporting — Quiz 62

Questions in this quiz (10)

1. Which account is credited for the par value when preferred stock is issued?

   • Retained earnings
   • Preferred stock
   • Treasury stock
   • Revenue

2. Which type of stock represents shares repurchased by a corporation?

   • Preferred stock
   • Treasury stock
   • Authorized stock
   • Convertible stock

3. What effect does treasury stock have on stockholders' equity?

   • Increases equity
   • Decreases equity
   • No effect
   • Increases assets

4. What is the purpose of stockholders' equity accounting?

   • To measure company liabilities
   • To track ownership interest and retained earnings
   • To record expenses
   • To calculate inventory

5. What does authorized stock represent?

   • Shares owned by investors
   • Maximum shares allowed to be issued
   • Shares repurchased by company
   • Shares outstanding

6. What is issued stock?

   • Shares authorized but not sold
   • Shares sold to investors
   • Shares repurchased by company
   • Shares cancelled

7. Which term refers to shares held by investors outside the company?

   • Treasury stock
   • Authorized stock
   • Outstanding stock
   • Convertible stock

8. Which transaction increases additional paid-in capital?

   • Declaring dividends
   • Issuing stock above par
   • Repurchasing stock
   • Recording expenses

9. Which account is credited when preferred stock is issued at par value?

   • Retained earnings
   • Preferred stock
   • Treasury stock
   • Revenue

10. Which entry records issuance of stock above par value?

    • Debit Cash; Credit Common Stock and Additional Paid-in Capital
    • Debit Common Stock; Credit Cash
    • Debit Cash; Credit Revenue
    • Debit Cash; Credit Retained Earnings