Concept Introduction:
Stocks (Common Stock and Preferred Stock):
There are two types of the share capital of a company. Common Stock represents the Common shares issued to the shareholders and preferred stock represents the
Requirement-a:
To Indicate:
The effect of the given transaction o the revenue and expense
Concept Introduction:
Stocks (Common Stock and Preferred Stock):
There are two types of the share capital of a company. Common Stock represents the Common shares issued to the shareholders and preferred stock represents the preference shares issued. Preference shares are given preference in payment of dividends and repayment of capital. Common shareholders get the inbuilt right to vote in decisions of the company and preference shareholders generally do not get this right but they may get voting rights with special provisions.
Requirement-b:
To Indicate:
The effect of the given transaction on the stock holder's equity
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Survey of Accounting (Accounting I)
- 5. Stockholders' equity The right side of the balance sheet shows the firm's liabilities and stockholders' equity. Which of the following best describes shareholders' equity? O Equity is the difference between the paid-in capital and retained earnings. O Equity is the sum of what the initial stockholders paid when they bought company shares and the earnings that the company has retained over the years. NOW Inc. released its annual results and financial statements. Grace is reading the summary in the business pages of today's paper. In its annual report this year, NOW Inc. reported a net income of $136 million. Last year, the company reported a retained earnings balance of $459 million, whereas this year it increased to $540 million. How much was paid out in dividends this year? O $55 million O $217 million O $4 million O $280 millionarrow_forwardAssuming a company has net income for the year, the end of year dollar balance in the "Total Stockholders' Equity" column of the statement of stockholders' equity should exactly match which of the following: Select one: a. The total cash balance on the balance sheet b. The total paid-in capital balance on the balance sheet c. The total liabilities balance on the balance sheet d. the total stockholders' equity balance on the balance sheet e. The total assets balance on the balance sheet f. The net income amount on the income statementarrow_forwardWhen a company buys shares of its own stock to be held in treasury, it records a reduction in: C . assets and an increase in shareholders’ equity.arrow_forward
- How should a "gain" from the sale of treasury stock be reflected when using the cost method of recording treasury stock transactions? Choices; As ordinary earnings shown on the income statement. As an increase in the amount shown for common stock. As treasury shares premium As an extraordinary item shown on the income statement.arrow_forwardHow is treasury stock reported on the balance sheet? Select one: Investment Contra asset Current asset Reduction of stockholders' equityarrow_forwardPlease see attached imagearrow_forward
- Cumulative preferred dividends in arrears should be shown in a corporation's balance sheet as: O A footnote O An increase in current liabilities O An increase in current liabilities for the current portion and long-term liabilities for the long-term portion O An increase in stockholders' equityarrow_forward17. Analyze the equity section of Gingerbread Corp's balance sheet and determine the following. Be careful to discriminate between a non monetary value and a monetary value. Use a $ sign to indicate a dollar value. 1.Number of shares of common stock that have been issued 2.Number of shares of preferred stock that have been issued 3.BlankDollar value the company paid to repurchase their own stock 4.How many shares of stock are in treasury stock?arrow_forward1. What is the profit for the year? 2. How many ordinary shares are outstanding? 3. What is the legal capital?arrow_forward
- When a company buys shares of its own stock to be held in treasury, it records a reduction in: B . both assets and shareholders’ equity.arrow_forwardStockholders’ equity represents the total value of a corporation’s stock plus retained earnings that have accumulated to date.; True or Falsearrow_forwardTreasury stock a. Has a normal credit balance. b. Decreases stockholders’ equity.c. Is recorded as an investment. d. Increases stockholders’ equity.arrow_forward
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