Question 1

Each of the following decreases retained earnings except a

Accepted Answer

A) cash dividend. 
B) liquidating dividend. 
C) stock dividend. 
D) All of these decrease retained earnings.

Question 2

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

Accepted Answer

A) True 
 B)False

Question 3

Marion, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2015. There were no dividends declared in 2014. The board of directors declares and pays a $65,000 dividend in 2015. What is the amount of dividends received by the common stockholders in 2015?

Accepted Answer

A) $0 
B) $25,000 
C) $65,000 
D) $40,000

Question 4

IFRS uses each of the following terms to describe retained earnings except

Accepted Answer

A) accumulated profit or loss. 
B) retained earnings. 
C) retained profits. 
D) share earnings.

Question 5

Which one of the following is a privately held corporation?

Accepted Answer

A) Intel 
B) General Electric 
C) Caterpillar Inc. 
D) Cargill Inc.

Question 6

The date a cash dividend becomes a binding legal obligation to a corporation is the

Accepted Answer

A) declaration date. 
B) earnings date. 
C) payment date. 
D) record date.

Question 7

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

Accepted Answer

A) True 
 B)False

Question 8

The per share amount normally assigned by the board of directors to a large stock dividend is

Accepted Answer

A) the market value of the stock on the date of declaration. 
B) the average price paid by stockholders on outstanding shares. 
C) the par or stated value of the stock. 
D) zero.

Question 9

The par value of a stock

Accepted Answer

A) is legally significant. 
B) reflects the most recent market price. 
C) is selected by the SEC. 
D) is indicative of the worth of the stock.

Question 10

The par value of stock issued for noncash assets is never a factor in determining the cost of the assets received.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is an incorrect statement about a corporation?

Accepted Answer

A) A corporation is an entity separate and distinct from its owners. 
B) Creditors ordinarily have recourse only to corporate assets in satisfaction of their claims. 
C) A corporation may be formed in writing, orally, or implied. 
D) A corporation is subject to numerous state and federal regulations.

Question 12

Cloud Manufacturing declared a 10% stock dividend when it had 700,000 shares of $3 par value common stock outstanding. The market price per common share was $12 per share when the dividend was declared. The entry to record this dividend declaration includes a credit to

Accepted Answer

A) Stock Dividends for $210,000. 
B) Paid-in Capital in Excess of Par for $630,000. 
C) Common Stock for $210,000. 
D) Common Stock Dividends Distributable for $840,000.

Question 13

Book value per share of common stock is the same amount as the market value per share.

Accepted Answer

A) True 
 B)False

Question 14

Retained earnings represents the amount of cash available for dividends.

Accepted Answer

A) True 
 B)False

Question 15

Legal capital per share cannot be equal to the

Accepted Answer

A) par value per share of par value stock. 
B) total proceeds from the sale of par value stock above par value. 
C) stated value per share of no-par value stock. 
D) total proceeds from the sale of no-par value stock.

Question 16

Previously issued financial statements with errors are required to be restated under

Accepted Answer

A) GAAP only. 
B) IFRS only. 
C) Both GAAP and IFRS. 
D) Neither GAAP or IFRS.

Question 17

The per share amount normally assigned by the board of directors to a small stock dividend is

Accepted Answer

A) the market value of the stock on the date of declaration. 
B) the average price paid by stockholders on outstanding shares. 
C) the par or stated value of the stock. 
D) zero.

Question 18

Two classifications appearing in the paid-in capital section of the balance sheet are

Accepted Answer

A) preferred stock and common stock. 
B) paid-in capital and retained earnings. 
C) capital stock and additional paid-in capital. 
D) capital stock and treasury stock.

Question 19

If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation.

Accepted Answer

A) True 
 B)False

Question 20

In the stockholders' equity section of the balance sheet, the classification of capital stock consists of

Accepted Answer

A) additional paid-in capital and common stock. 
B) common stock and treasury stock. 
C) common stock, preferred stock, and treasury stock. 
D) common stock and preferred stock.

Exam 11: Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Each of the following decreases retained earnings except a

A detailed stockholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

IFRS uses each of the following terms to describe retained earnings except

Which one of the following is a privately held corporation?

The date a cash dividend becomes a binding legal obligation to a corporation is the

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

The per share amount normally assigned by the board of directors to a large stock dividend is

The par value of a stock

The par value of stock issued for noncash assets is never a factor in determining the cost of the assets received.

Which of the following is an incorrect statement about a corporation?

Cloud Manufacturing declared a 10% stock dividend when it had 700,000 shares of $3 par value common stock outstanding. The market price per common share was $12 per share when the dividend was declared. The entry to record this dividend declaration includes a credit to

Book value per share of common stock is the same amount as the market value per share.

Retained earnings represents the amount of cash available for dividends.

Legal capital per share cannot be equal to the

Previously issued financial statements with errors are required to be restated under

The per share amount normally assigned by the board of directors to a small stock dividend is

Two classifications appearing in the paid-in capital section of the balance sheet are

If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation.

In the stockholders' equity section of the balance sheet, the classification of capital stock consists of