Question 1

How is treasury stock shown on the balance sheet?

Accepted Answer

A)  as an asset 
B)  as a decrease in stockholders' equity 
C)  as an increase in stockholders' equity 
D)  treasury stock is not shown on the balance sheet 
A)  as an asset 
B)  as a decrease in stockholders' equity 
C)  as an increase in stockholders' equity 
D)  treasury stock is not shown on the balance sheet

Question 2

When a corporation completes a 3-for-1 stock split

Accepted Answer

A)  the ownership interest of current stockholders is decreased 
B)  the market price per share of the stock is decreased 
C)  the par value per share is decreased 
D)  b and c 
A)  the ownership interest of current stockholders is decreased 
B)  the market price per share of the stock is decreased 
C)  the par value per share is decreased 
D)  b and c

Question 3

A corporation was organized on January 1 of the current year, with an authorization of 20,000 shares of $4 preferred stock, $12 par, and 100,000 shares of $3 par common stock.
The following selected transactions were completed during the first year of operations:
   Required: Journalize the transactions.

Accepted Answer

The answer of A corporation was organized on January 1...

Question 4

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the Retained Earnings account to Paid-in Capital accounts as a result of the stock dividend?

Accepted Answer

A)  $12,800 
B)  $19,200 
C)  $32,000 
D)  $48,800 
A)  $12,800 
B)  $19,200 
C)  $32,000 
D)  $48,800

Question 5

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 6

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:

Accepted Answer

(a)
 @#IMG-DLM&_TB2013_00 (b)

Question 7

Cash dividends become a liability to a corporation on the date of record.

Accepted Answer

A) True 
 B)False

Question 8

One of the prerequisites to paying a cash dividend is sufficient retained earnings.

Accepted Answer

A) True 
 B)False

Question 9

On April 10, a company acquired land in exchange for 1,000 shares of $20 par common stock with a current market price of $73. Journalize this transaction.

Accepted Answer

The answer of On April 10, a company acquired land...

Question 10

A large retained earnings account means that there is cash available to pay dividends.

Accepted Answer

A) True 
 B)False

Question 11

A corporation is a separate entity for accounting purposes but for legal purposes.

Accepted Answer

A) True 
 B)False

Question 12

A sale of treasury stock may result in a decrease in paid-in-capital. All decreases should be charged to the Paid-In-Capital from Sale of Treasury account.

Accepted Answer

A) True 
 B)False

Question 13

The issuance of common stock affects both paid-in capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 14

In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported?

Accepted Answer

A)  other expense on income statement 
B)  intangible asset on balance sheet 
C)  stockholders' equity on balance sheet 
D)  other income on income statement 
A)  other expense on income statement 
B)  intangible asset on balance sheet 
C)  stockholders' equity on balance sheet 
D)  other income on income statement

Question 15

The declaration and issuance of a stock dividend does affect the total amount of a corporation's assets, liabilities, or stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 16

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:   Determine the dividends per share for preferred and common stock for the first year.

Accepted Answer

A)  $0.50 and $0.10 
B)  $0.00 and $0.10 
C)  $0.50 and $0.00 
D)  $2.00 and $0.00 
A)  $0.50 and $0.10 
B)  $0.00 and $0.10 
C)  $0.50 and $0.00 
D)  $2.00 and $0.00

Question 17

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

Accepted Answer

A)  $3,200 
B)  $6,400 
C)  $4,800 
D)  $8,800 
A)  $3,200 
B)  $6,400 
C)  $4,800 
D)  $8,800

Question 18

If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per common share.

Accepted Answer

A) True 
 B)False

Question 19

The date on which a cash dividend becomes a binding legal obligation is on the

Accepted Answer

A)  declaration date. 
B)  date of record. 
C)  payment date. 
D)  last day of the fiscal year. 
A)  declaration date. 
B)  date of record. 
C)  payment date. 
D)  last day of the fiscal year.

Question 20

Treasury Stock is listed in the stockholders' equity section on the balance sheet.

Accepted Answer

A) True 
 B)False

Exam 13: Corporations: Organization, Stock Transactions, and Dividends

How is treasury stock shown on the balance sheet?

When a corporation completes a 3-for-1 stock split

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:

Cash dividends become a liability to a corporation on the date of record.

One of the prerequisites to paying a cash dividend is sufficient retained earnings.

On April 10, a company acquired land in exchange for 1,000 shares of $20 par common stock with a current market price of $73. Journalize this transaction.

A large retained earnings account means that there is cash available to pay dividends.

A corporation is a separate entity for accounting purposes but for legal purposes.

A sale of treasury stock may result in a decrease in paid-in-capital. All decreases should be charged to the Paid-In-Capital from Sale of Treasury account.

The issuance of common stock affects both paid-in capital and retained earnings.

In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported?

The declaration and issuance of a stock dividend does affect the total amount of a corporation's assets, liabilities, or stockholders' equity.

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Determine the dividends per share for preferred and common stock for the first year.

If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per common share.

The date on which a cash dividend becomes a binding legal obligation is on the

Treasury Stock is listed in the stockholders' equity section on the balance sheet.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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