MANAGERIAL ACCOUNTING EXAM
QUESTIONS WITH 100% CORRECT
ANSWERS
Evergreen Manufacturing Corporation purchased 4,000 shares of its own previously
issued $10 par common stock for $92,000. As a result of this event,
a. Evergreen's Common Stock account decreased $40,000.
b. Evergreen's total stockholders' equity increased $92,000.
c. Evergreen's Paid-in Capital in Excess of Par account decreased $52,000.
d. Evergreen debited Treasury Stock for the cost of the shares $92,000.
e. Evergreen debited Treasury Stock for the par value of the shares $40,000. - Answer-
d. Evergreen debited Treasury Stock for the cost of the shares $92,000.
Treasury stock is the company's own stock that it has bought back. The company
records Treasury Stock at its cost.
Evergreen Manufacturing Corporation purchased 4,000 shares of its own previously
issued $10 par common stock for $92,000. As a result of this event,
a. Evergreen's Common Stock account decreased $40,000.
b. Evergreen's total stockholders' equity decreased $92,000.
c. Evergreen's Paid-in Capital in Excess of Par account decreased $52,000.
d. All of the above. - Answer-b. Evergreen's total stockholders' equity decreased
$92,000.
Treasury stock is not treated the same as stock which has been purchased by
investors. Treasury stock is a contra-equity account which is deducted from
Stockholders' Equity.
XYZ, Inc. sells 100 shares of $5 par value treasury stock at $13 per share. If the cost of
acquiring the shares was $10 per share, the entry for the sale should include
credits to:
a. Treasury Stock $1,000 and Paid-in Capital from Treasury Stock $300.
b. Treasury Stock $500 and Paid-in Capital from Treasury
Stock $800.
c. Treasury Stock $1,000 and Retained Earnings $300.
d. Treasury Stock $500 and Paid-in Capital in Excess of
Par $800. - Answer-a. Treasury Stock $1,000 and Paid-in Capital from Treasury Stock
$300.
, Know the complete journal entry which is: [Note that you ignore par value
in this entry when dealing with Treasury Stock]
Cash 1,300 [100 sh x $13]
Treasury Stock [100 sh. X $10 cost] 1,000
Paid-in Capital from Treasury Stock 300
[ ($13 - $10) x 100 sh. Or $1,300 - 1,000]
In the stockholders' equity section, the cost of treasury stock is deducted from:
a. total paid-in capital and retained earnings.
b. retained earnings.
c. total stockholders' equity.
d. common stock in paid-in capital. - Answer-a. total paid-in capital and retained
earnings.
Treasury stock is generally accounted for by the
a. cost method.
b. market value method.
c. par value method.
d. stated value method. - Answer-a. cost method.
Treasury Stock is a(n)
a. contra asset account.
b. retained earnings account.
c. asset account.
d. contra stockholders' equity account - Answer-d. contra stockholders' equity account
A corporation purchases 30,000 shares of its own $30 par common stock for $45 per
share, recording it at cost. What will be the effect on total stockholders' equity?
a. Increase by $1,350,000
b. Decrease by $900,000
c. Decrease by $1,350,000
d. Increase by $900,000 - Answer-c. Decrease by $1,350,000 [30,000 shares x $45
Cost]
Treasury stock is the company's own stock that it has bought back. Treasury stock is
not treated the same as stock which has been purchased by investors.Treasury stock is
a contra-equity account which is deducted from Stockholders' Equity.
The following data is available for Blaine Corporation at December 31, 2012:
Common stock, par $10 (authorized 25,000 shares) $200,000
Treasury Stock (at cost $15 per share) 900
Based on the data, how many shares of common stock are outstanding?
a. 25,000
b. 20,000
QUESTIONS WITH 100% CORRECT
ANSWERS
Evergreen Manufacturing Corporation purchased 4,000 shares of its own previously
issued $10 par common stock for $92,000. As a result of this event,
a. Evergreen's Common Stock account decreased $40,000.
b. Evergreen's total stockholders' equity increased $92,000.
c. Evergreen's Paid-in Capital in Excess of Par account decreased $52,000.
d. Evergreen debited Treasury Stock for the cost of the shares $92,000.
e. Evergreen debited Treasury Stock for the par value of the shares $40,000. - Answer-
d. Evergreen debited Treasury Stock for the cost of the shares $92,000.
Treasury stock is the company's own stock that it has bought back. The company
records Treasury Stock at its cost.
Evergreen Manufacturing Corporation purchased 4,000 shares of its own previously
issued $10 par common stock for $92,000. As a result of this event,
a. Evergreen's Common Stock account decreased $40,000.
b. Evergreen's total stockholders' equity decreased $92,000.
c. Evergreen's Paid-in Capital in Excess of Par account decreased $52,000.
d. All of the above. - Answer-b. Evergreen's total stockholders' equity decreased
$92,000.
Treasury stock is not treated the same as stock which has been purchased by
investors. Treasury stock is a contra-equity account which is deducted from
Stockholders' Equity.
XYZ, Inc. sells 100 shares of $5 par value treasury stock at $13 per share. If the cost of
acquiring the shares was $10 per share, the entry for the sale should include
credits to:
a. Treasury Stock $1,000 and Paid-in Capital from Treasury Stock $300.
b. Treasury Stock $500 and Paid-in Capital from Treasury
Stock $800.
c. Treasury Stock $1,000 and Retained Earnings $300.
d. Treasury Stock $500 and Paid-in Capital in Excess of
Par $800. - Answer-a. Treasury Stock $1,000 and Paid-in Capital from Treasury Stock
$300.
, Know the complete journal entry which is: [Note that you ignore par value
in this entry when dealing with Treasury Stock]
Cash 1,300 [100 sh x $13]
Treasury Stock [100 sh. X $10 cost] 1,000
Paid-in Capital from Treasury Stock 300
[ ($13 - $10) x 100 sh. Or $1,300 - 1,000]
In the stockholders' equity section, the cost of treasury stock is deducted from:
a. total paid-in capital and retained earnings.
b. retained earnings.
c. total stockholders' equity.
d. common stock in paid-in capital. - Answer-a. total paid-in capital and retained
earnings.
Treasury stock is generally accounted for by the
a. cost method.
b. market value method.
c. par value method.
d. stated value method. - Answer-a. cost method.
Treasury Stock is a(n)
a. contra asset account.
b. retained earnings account.
c. asset account.
d. contra stockholders' equity account - Answer-d. contra stockholders' equity account
A corporation purchases 30,000 shares of its own $30 par common stock for $45 per
share, recording it at cost. What will be the effect on total stockholders' equity?
a. Increase by $1,350,000
b. Decrease by $900,000
c. Decrease by $1,350,000
d. Increase by $900,000 - Answer-c. Decrease by $1,350,000 [30,000 shares x $45
Cost]
Treasury stock is the company's own stock that it has bought back. Treasury stock is
not treated the same as stock which has been purchased by investors.Treasury stock is
a contra-equity account which is deducted from Stockholders' Equity.
The following data is available for Blaine Corporation at December 31, 2012:
Common stock, par $10 (authorized 25,000 shares) $200,000
Treasury Stock (at cost $15 per share) 900
Based on the data, how many shares of common stock are outstanding?
a. 25,000
b. 20,000
