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1. An appropriation of retained earnings by the board of directors of a corporation for bonded indebtedness will result in
A. The establishment of a sinking fund to retire bonds when they mature., B. A decrease in cash on the balance sheet with an equal increase in theinvestment and funds section of the balance sheet., C. A decrease in the total amount of retained earnings presented on the balance sheet., D. The disclosure that management does not intend to distribute assets, in theform of dividends, equal to the amount of the appropriation.,
2. Which one of the following transactions does not affect the balance of retained earnings?
A. Asset, .B. Reduction of retained earnings., C. Reduction of additional paid-in-capital., D. Unallocated reduction of equity.,
3. Which one of the following statements regarding treasury stock is correct?
A. Reconciliation of the beginning and ending balances in shareholders’equity accounts., B. Listing of all shareholders’ equity accounts and their corresponding dollaramounts., C. Computation of the number of shares outstanding used for earnings pershare calculations., D. Reconciliation of net income to net operating cash flow.,
4. Grand Corporation has 10,000,000 shares of $10 par-value stock authorized, of which 2,000,000 shares are issued and outstanding. The Board of Directors of Grand declared a 2-for-1 stock split on November 30 to be issued on December 30. The stock was selling for $30 per share on the date of declaration. In addition, the Board has amended the articles of incorporation to allow for a proportional increase in the number of authorized shares. The par-value information appearing in the shareholder’s equity section of Grand’s statement of financial position at December 31 will be
A. The vote for directors., B. Corporate assets upon liquidation., C. Cumulative dividends. test , D. New issues of stock of the same class.,
5. Bertram Company had a balance of $100,000 in retained earnings at the beginning of the year and of $125,000 at the end of the year. Net income for this time period was $40,000. Bertram’s statement of financial position indicated that the dividends payable account had decreased by $5,000 throughout the year, despite the fact that both cash dividends and a stock dividend were declared. The amount of the stock dividend was $8,000. When preparing its statement of cash flows for the year, Bertram should show cash paid for dividends as
A. The firm’s after-tax profits are shared equally by common and preferredshareholders., B. Control of the firm is now shared by the common and preferredshareholders, with preferred shareholders having greater control. ESL , C. Preferred shareholders’ claims take precedence over the claims of commonshareholders in the event of liquidation., D. Nonpayment of preferred dividends places the firm in default, as doesnonpayment of interest on debt,
6. Tyler Corporation purchased 10,000 shares of its own $5 par-value common stock for $25 per share. This stock originally sold for $28 per share. Tyler used the cost method to record this transaction. If the par-value method had been used rather than the cost method, which of the following accounts would show a different dollar amount?
A. $1,680,000, B. $1,720,000 results , C. $1,780,000, D. $1,820,000,
7. When treasury stock is accounted for at cost, the cost is reported on the balance sheet as a(n)
A. Absorb a fire loss when a company is self-insured., B. Provide for a contingent loss that is probable and reasonable., C. Smooth periodic income., D. Restrict earnings available for dividends.,
8. Which one of the following statements is correct regarding the effect preferred stock has on a company?
A. It is unretired but no longer outstanding, yet it has all the rights ofoutstanding shares., B. It is an asset representing shares that can be sold in the future or otherwiseissued in stock option plans or in effectuating business combinations., C. It is unable to participate in the liquidation proceeds of the firm but able toparticipate in regular cash dividend distributions as well as stock dividendsand stock splits., D. It is reflected in shareholders’ equity as a contra account.,
9. Zinc Co.’s adjusted trial balance at December 31, Year 6, includes the following account balances: Common stock, $3 par $600,000 Additional paid-in capital 800,000 Treasury stock, at cost 50,000 Net unrealized holding loss on available-for-sale securities 20,000 Retained earnings: appropriated for uninsured earthquake losses 150,000 Retained earnings: unappropriated 200,000 What amount should Zinc report as total equity in its December 31, Year 6, balance sheet?
A. Treasury stock and total shareholders’ equity., B. Additional paid-in capital and retained earnings., C. Paid-in capital from treasury stock and retained earnings., D. Additional paid-in capital and treasury stock,
10. Underhall, Inc.’s common stock is currently selling for $108 per share. Underhall is planning a new stock issue in the near future and would like to stimulate interest in the company. The Board, however, does not want to distribute capital at this time. Therefore, Underhall is considering whether to offer a 2-for-1 common stock split or a 100%25 stock dividend on its common stock. The best reason for opting for the stock split is that
A. $100,000, B. $150,000, C. $160,000, D. $175,000,
11. The statement of shareholders’ equity shows a
A. A loss of $25 per share to be distributed., B. A gain of $25 per share to be distributed., C. No gain or loss., D. An appropriate gain or loss based on the market value on the date ofdistribution.,
12. Unless the shares are specifically restricted,a holder of common stock with a preemptiveright may share proportionately in all of the following except
A. $5, B. $10, C. $15, D. $30,
13. Which one of the following statements regarding dividends is correct?
A. $90,000, B. $100,000, C. $540,000, D. $600,000,
14. An undistributed stock dividend declared by the Board of Directors should be reported as a(n)
A. $20,000, B. $15,000, C. $12,000, D. $5,000,
15. Items reported as prior-period adjustments
A. Decrease Increase, B. Decrease No change, C. Increase Decrease, D. Increase No change,
16. A retained earnings appropriation can be used to
A. Current liability., B. Long-term liability., C. Footnote to the financial statements., D. Item in the shareholders’ equity section.,
17. How would a stock split affect the par value of the stock and the company’s shareholders’ Equity Respectively ?
A. A stock dividend of 15%25 of the outstanding common shares results in adebit to retained earnings at the par value of the stock distributed., B. At the declaration date of a 30%25 stock dividend, the carrying value ofretained earnings will be reduced by the fair market value of the stock distributed., C. The declaration of a cash dividend will have no effect on book value pershare., D. The declaration and payment of a 10%25 stock dividend will result in areduction of retained earnings at the fair market value of the stock.,
18. Fox Company has 1,000,000 shares of common stock authorized, of which 100,000 shares are held as treasury shares; the remainder are held by the company shareholders. On November 1, the Board of Directors declared a cash dividend of $.10 per share to be paid on January 2. At the same time, the Board declared a 5%25 stock dividend to be issued on December 31. On the date of the declaration, the stock was selling for $10 a share, and no fractional shares were to be issued. The total amount of these declarations to be shown as current liabilities on Fox’s statement of financial position as of December 31 is
A. Declaration of a stock dividend., B. A quasi-reorganization. matching excercise , C. Declaration of a stock split., D. Declaration of a property dividend.,
19. On December 1, Noble Inc.’s Board of Directors declared a property dividend, payable in stock held in the Multon Company. The dividend was payable on January 5. The investment in Multon stock had an original cost of $100,000 when acquired 2 years ago. The marke value of this investment was $150,000 on December 1, $175,000 on December 31, and $160,000 on January 5. The amount to be shown on Noble’s statement of financial positionat December 31 as property dividends payable would be
A. It will not decrease shareholders’ equity., B. It will not impair the company’s ability to pay dividends in the future, C. The impact on earnings per share will not be as great. online quizzes , D. The par value per share will remain unchanged.,