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Louisiana State University, Shreveport ACCT 701 MULTIPLE CHOICE QUESTIONS 1)Stockholders of a corporation directly elect the president of the corporation

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Louisiana State University, Shreveport

ACCT 701

MULTIPLE CHOICE QUESTIONS

1)Stockholders of a corporation directly elect

1. 1. the president of the corporation.
   2. the board of directors.
   3. the treasurer of the corporation.
   4. all of the employees of the corporation.

 

 

2. Those most responsible for the major policy decisions of a corporation are the
   1. stockholders.
   2. board of directors.
   3. management.
   4. employees.

 

 

3. The chief accounting officer in a company is known as the
   1. controller.
   2. treasurer.
   3. vice-president.
   4. president.

 

 

4. Which one of the following would not be considered an advantage of the corporate form of organization?
   1. Limited liability of stockholders.
   2. Separate legal existence.
   3. Continuous life.
   4. Government regulation.

 

 

5. The two ways that a corporation can be classified by purpose are
   1. general and limited.
   2. profit and not-for-profit.
   3. state and federal.
   4. publicly held and privately hel

 

 

 

 

 

6. The two ways that a corporation can be classified by ownership are
   1. publicly held and privately held.
   2. stock and non-stock.
   3. inside and outside.
   4. majority and minority.

 

 

7. Which of the following would not be true of a privately held corporation?
   1. It is sometimes called a closely held corporation.
   2. Its shares are regularly traded on the New York Stock Exchange.
   3. It does not offer its shares for sale to the general publi
   4. It is usually smaller than a publicly held company.

 

 

 

8. Jason Hansen has invested $600,000 in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Hansen stand to lose?
   1. Up to his total investment of $600,000.
   2. Zero.
   3. The $600,000 plus any personal assets the creditors demand.

d. $400,000.

 

 

9. Which of the following statements reflects the transferability of ownership rights in a corporation?
   1. If a stockholder decides to transfer ownership, he must transfer all of his shares.
   2. A stockholder may dispose of part or all of his shares.
   3. A stockholder must obtain permission of the board of directors before selling shares.
   4. A stockholder must obtain permission from at least three other stockholders before selling shares.

 

 

10. A corporate board of directors does not generally
    1. select officers.
    2. formulate operating policies.
    3. declare dividends.
    4. execute policy.

 

 

 

 

 

 

 

 

 

 

11. The officer that is generally responsible for maintaining the cash position of the corporation is the
    1. controller.
    2. treasurer.
    3. cashier.
    4. internal auditor.

 

 

12. The ability of a corporation to obtain capital is
    1. enhanced because of limited liability and ease of share transferability.
    2. less than a partnership.
    3. restricted because of the limited life of the corporation.
    4. about the same as a partnership.

 

 

 

 

13. A disadvantage of the corporate form of organization is
    1. professional management.
    2. tax treatment.
    3. ease of transfer of ownership.
    4. lack of mutual agency.

 

 

 

 

 

14. Which one of the following is not an ownership right of a stockholder in a corporation?
    1. To vote in the election of directors.
    2. To declare dividends on the common stock.
    3. To share in assets upon liquidation.
    4. To share in corporate earnings.

 

 

15. If no-par stock is issued without a stated value, then
    1. the par value is automatically $1 per share.
    2. the entire proceeds are considered to be legal capital.
    3. there is no legal capital.
    4. the corporation is automatically in violation of its state charter.

 

 

16. If a stockholder cannot attend a stockholders’ meeting, he may delegate his voting rights by means of a(n)
    1. absentee ballot.
    2. proxy.
    3. certified letter.
    4. telegram.

 

 

17. The term residual claim refers to a stockholders’ right to
    1. receive dividends.
    2. share in assets upon liquidation.
    3. acquire additional shares when offered.
    4. exercise a proxy vote.

 

 

18. Which of the following factors does not affect the initial market price of a stock?
    1. The company’s anticipated future earnings.
    2. The par value of the stock.
    3. The current state of the economy.
    4. The expected dividend rate per share.

 

 

19. If an investment firm underwrites a stock issue, the

 

1. 1. risk of being unable to sell the shares stays with the issuing corporation.
   2. corporation obtains cash immediately from the investment firm.
   3. investment firm has guaranteed profits on the sale of the stock.
   4. issuance of stock is likely to be directly to creditors.

 

 

20. The par value of a stock
    1. is legally significant.
    2. reflects the most recent market price.
    3. is selected by the SEC.
    4. is indicative of the worth of the stock.

 

 

21. Par value
    1. represents what a share of stock is worth.
    2. represents the original selling price for a share of stock.
    3. is established for a share of stock after it is issued.
    4. is the value assigned per share in the corporate charter.

 

 

22. The term legal capital is a descriptive term for
    1. stockholders’ equity.
    2. par value.
    3. residual equity.
    4. market value.

 

 

23. A corporation has the following account balances: Common Stoc$1 par value,

$80,000; Paid-in Capital in Excess of Par Value, $2,700,000. Based on this information, the

1. 1. legal capital is $2,780,000.
   2. number of shares issued is 80,000.
   3. number of shares outstanding is 2,780,000.
   4. average price per share issued is $3.48.

 

 

24. The amount of stock that may be issued according to the corporation’s charter is referred to as the
    1. authorized stock.

 

1. 2. issued stock.
   3. unissued stock.
   4. outstanding stock.

 

 

 

 

 

25. If Norben Company issues 6,000 shares of $5 par value common stock for $210,000, the account
    1. Common Stock will be credited for $210,000.
    2. Paid-in Capital in Excess of Par Value will be credited for $30,000.
    3. Paid-in Capital in Excess of Par Value will be credited for $180,000.
    4. Cash will be debited for $180,000.
26. Alt Corp. issues 5,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:
    1. Common Stock $50,000 and Paid-in Capital in Excess of Stated Value $20,000.
    2. Common Stock $70,000.
    3. Common Stock $50,000 and Paid-in Capital in Excess of Par Value $20,000.
    4. Common Stock $50,000 and Retained Earnings $20,000.
27. If Lantz Company issues 10,000 shares of $5 par value common stock for $210,000, the account
    1. Common Stock will be credited for $50,000.
    2. Paid-in Capital in Excess of Par Value will be credited for $50,000.
    3. Paid-in Capital in Excess of Par Value will be credited for $210,000.
    4. Cash will be debited for $160,000.

 

 

28. If Pratt Company issues 5,000 shares of $5 par value common stock for $210,000, the account
    1. Common Stock will be credited for $185,000.
    2. Paid-in Capital in Excess of Par Value will be credited for $210,000.
    3. Paid-in Capital in Excess of Par Value will be credited for $235,000.
    4. Cash will be debited for $210,000.

 

 

 

 

 

 

 

29. Paid-in Capital in Excess of Par Value
    1. is credited when no-par stock does not have a stated value.
    2. is reported as part of paid-in capital on the balance sheet.
    3. represents the amount of legal capital.
    4. normally has a debit balance.

 

 

30. The Paid-in Capital in Excess of Par Value is increased in the accounting records when
    1. the number of shares issued exceeds par value.
    2. the stated value of capital stock is greater than the par value.
    3. the market value of the stock rises above par value.
    4. capital stock is issued at an amount greater than par value.

 

 

31. Which of the following represents the largest number of common shares?
    1. Treasury shares.
    2. Issued shares.
    3. Outstanding shares.
    4. Authorized shares.

 

 

32. Tomlinson Packaging Corporation began business in 2017 by issuing 50,000 shares of

$5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2017 balance sheet, Tomlinson Packaging would report

1. 1. Common Stock of $500,000.
   2. Common Stock of $250,000.
   3. Common Stock of $400,000.
   4. Paid-in Capital of $330,000.

 

33. Holden Packaging Corporation began business in 2017 by issuing 90,000 shares of $5 par common stock for $8 per share and 20,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2017 balance sheet, Holden Packaging would report
    1. Common Stock of $900,000.
    2. Common Stock of $450,000.
    3. Common Stock of $720,000.

 

1. 4. Paid-In Capital of $675,000.

 

 

 

 

 

 

 

 

34. Cey, Inc. issued 10,000 shares of stock at a stated value of $10/share. The total issue of stock sold for $15/share. The journal entry to record this transaction would include a
    1. debit to Cash for $100,000.
    2. credit to Common Stock for $100,000.
    3. credit to Paid-in Capital in Excess of Par Value for $50,000.
    4. credit to Common Stock for $150,000.

 

35. When stock is issued in exchange for a noncash asset, the value recorded for the shares issued is best determined by
    1. the book value of the noncash asset.
    2. the market value of the shares.
    3. the par value of the shares.
    4. the contributed capital of the shares.

 

 

36. S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreement was reached whereby E. Corp. would pay S.  Lawyer a legal  fee of approximately

$20,000 by issuing 8,000 shares of its common stock (par $1). The stock trades on a daily basis and the market price of the stock on the day the debt was settled is $2.40 per share. Given this information, the best journal entry for E. Corp. to record for this transaction is

1. 1. Legal Expense                                                                                                      19,200

Common Stock                                                                                                                    19,200

1. 2. Legal Expense                                                                                                      20,000

Common Stock                                                                                                                    20,000

1. 3. Legal Expense                                                                                                      20,000

Common Stock                                                                                                                       8,000

Paid-in Capital in Excess of Par - Common                                                               13,000

1. 4. Legal Expense                                                                                                      19,200

Common Stock                                                                                                                       8,000

Paid-in Capital in Excess of Par - Common                                                               11,200

 

37. If the market value of the assets received and the market value of the stock issued are both available, then what amount should be used to value the assets?

 

1. 1. Market value of the stock.
   2. Market value of the assets.
   3. Par value of the stock.
   4. The more clearly determinable market value.

 

 

 

 

 

 

 

 

 

 

38. Johnson Company issued 900 shares of no-par common stock for $17,100. Which of the following journal entries would be made if the stock has no stated value?
    1. Cash                                                                                                                         17,100

Common Stock – No-Par Value                                                                                     17,100

1. 2. Cash                                                                                                                         17,100

Common Stock – No-Par Value                                                                                                                                        900

Paid-in Capital in Excess of Par                                                                                      16,200

1. 3. Cash                                                                                                                         17,100

Common Stock – No-Par Value                                                                                                                                        900

Paid-in Capital in Excess of Stated Value                                                                  16,200

1. 4. Common Stock – No-Par Value                                                                     17,100

Cash                                                                                                                                         17,100

 

39. Dawson Company issued 800 shares of no-par common stock for $7,200. Which of the following journal entries would be made if the stock has stated value of $2 per share?
    1. Cash                                                                                                                            7,200

Common Stock                                                                                                                       7,200

1. 2. Cash                                                                                                                            7,200

Common Stock                                                                                                                       1,600

Paid-in Capital in Excess of Par                                                                                         5,600

1. 3. Cash                                                                                                                            7,200

Common Stock                                                                                                                       1,600

Paid-in Capital in Excess of Stated Value                                                                     5,600

1. 4. Common Stock                                                                                                       7,200

Cash                                                                                                                                            7,200

40. Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 10,000 shares of common stock to pay its recent attorney's bill of $50,000 for legal services on a land access dispute, which of the following would be the best journal entry for Retro to record?
    1. Legal Expense                                                                                                      10,000

 

Common Stock		10,000
b. Legal Expense	50,000
Common Stock		50,000
c. Legal Expense	50,000
Common Stock		10,000
Paid-in Capital in Excess of Stated Value - Common		40,000
d. Legal Expense	50,000
Common Stock		10,000
Paid-in Capital in Excess of Par value - Common		40,000

 

41. Which of the following statements about treasury stock is true?
    1. Few corporations have treasury stock.
    2. Purchasing treasury stock is done to eliminate hostile shareholder buyouts.
    3. Companies acquire treasury stock to increase the number of shares outstanding.
    4. Companies acquire treasury stock to decrease earnings per share.

 

42. The following data is available for BOX Corporation at December 31, 2017: Common stocpar $10 (authorized 30,000 shares)                                                                                                            $270,000 Treasury stock (at cost $15 per share)                                                                                                                                $ 1,200

Based on the data, how many shares of common stock are outstanding? a. 30,000.

b. 27,000.

c.   29,920.

d. 26,920.

 

 

43. The following data is available for BOX Corporation at December 31, 2017: Common stocpar $10 (authorized 30,000 shares)                                                                                                            $270,000 Treasury stock (at cost $15 per share)                                                                                                                                $ 1,200

Based on the data, how many shares of common stock are issued? a. 30,000.

b. 27,000.

c.   29,920.

d. 26,920.

 

44. Kaplan Manufacturing Corporation purchased 2,500 shares of its own previously issued

$10 par common stock for $62,500. As a result of this event,

1. 1. Kaplan’s Common Stock account decreased $25,000.
   2. Kaplan’s total stockholders’ equity decreased $62,500.
   3. Kaplan’s Paid-in Capital in Excess of Par Value account decreased $37,500.
   4. All of these answer choices are correct.

 

 

45. Leary Manufacturing Corporation purchased 5,000 shares of its own previously issued

$10 par common stock for $125,000. As a result of this event,

1. 1. Leary’s Common Stock account decreased $50,000.
   2. Leary’s total stockholders’ equity decreased $125,000.
   3. Leary’s Paid-in Capital in Excess of Par Value account decreased $75,000.
   4. All of these answer choices are correct.

 

 

 

 

46. Treasury stock is
    1. stock issued by the U.S. Treasury Department.
    2. stock purchased by a corporation and held as an investment in its treasury.
    3. corporate stock issued by the treasurer of a company.
    4. a corporation’s own stocwhich has been reacquired and held for future use.

 

 

47. The acquisition of treasury stock by a corporation
    1. increases its total assets and total stockholders’ equity.
    2. decreases its total assets and total stockholders’ equity.
    3. has no effect on total assets and total stockholders’ equity.
    4. requires that a gain or loss be recognized on the income statement.

 

 

48. A corporation purchases 20,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders’ equity?
    1. Increase by $700,000.
    2. Decrease by $400,000.
    3. Decrease by $700,000.
    4. Decrease by $300,000.
49. A corporation purchases 30,000 shares of its own $10 par common stock for $25 per share, recording it at cost. What will be the effect on total stockholders’ equity?
    1. Increase by $300,000.
    2. Decrease by $750,000.
    3. Increase by $750,000.
    4. Decrease by $300,000.

 

 

50. Treasury stock should be reported in the financial statements of a corporation as a(n)
    1. investment.
    2. liability.
    3. deduction from total paid-in capital.
    4. deduction from total paid-in capital and retained earnings.

 

 

51. A company would not acquire treasury stock
    1. in order to reissue shares to officers.
    2. as an asset investment.
    3. in order to increase trading of the company’s stock.
    4. to have additional shares available to use in acquisitions of other companies.

 

 

 

52. Treasury Stock is a(n)
    1. contra asset account.
    2. retained earnings account.
    3. asset account.
    4. contra stockholders’ equity account.

 

 

53. The number of shares of issued stock equals
    1. unissued shares minus outstanding shares.
    2. outstanding shares plus treasury shares.
    3. authorized shares minus treasury shares.
    4. outstanding shares plus authorized shares.

 

 

54. Treasury shares plus outstanding shares equal
    1. authorized stock.
    2. issued stock.
    3. unissued stock.
    4. distributable stock.

 

 

55. Which of the following is not a right or preference associated with preferred stock?
    1. The right to vote.
    2. First claim to dividends.
    3. Preference to corporate assets in case of liquidation.
    4. To receive dividends in arrears before common stockholders receive dividends.

 

 

56. Logan Corporation issues 70,000 shares of $50 par value preferred stock for cash at

$60 per share. The entry to record the transaction will consist of a debit to Cash for

$4,200,000 and a credit or credits to

1. 1. Preferred Stock for $4,200,000.

 

1. 2. Preferred Stock for $3,500,000 and Paid-in Capital in Excess of Par Value— Preferred Stock for $700,000.
   3. Preferred Stock for $3,500,000 and Retained Earnings for $700,000.
   4. Paid-in Capital from Preferred Stock for $4,200,000.

 

57. Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at

$60 per share. In the stockholders’ equity section, the effects of the transaction above will be reported

1. 1. entirely within the capital stock section.
   2. entirely within the additional paid-in capital section.
   3. under both the capital stock and additional paid-in capital sections.
   4. entirely under the retained earnings section.

 

58. Nice Corporation issues 40,000 shares of $100 par value preferred stock for cash at

$110 per share. The entry to record the transaction will consist of a debit to Cash for

$4,400,000 and a credit or credits to

1. 1. Preferred Stock for $4,400,000.
   2. Preferred Stock for $4,000,000 and Paid-in Capital in Excess of Par Value— Preferred Stock for $400,000.
   3. Preferred Stock for $4,000,000 and Retained Earnings for $300,000.
   4. Paid-in Capital from Preferred Stock for $4,400,000.

 

59. Dividends in arrears on cumulative preferred stock
    1. never have to be paid, even if common dividends are paid.
    2. must be paid before common stockholders can receive a dividend.
    3. should be recorded as a current liability until they are paid.
    4. enable the preferred stockholders to share equally in corporate earnings with the common stockholders.

 

 

60. Dividends in arrears on cumulative preferred stock
    1. are considered to be a non-current liability.
    2. are considered to be a current liability.
    3. only occur when preferred dividends have been declared.
    4. should be disclosed in the notes to the financial statements.

 

 

 

61. Outstanding stock of the West Corporation included 40,000 shares of $5 par common stock and 10,000 shares of 5%, $10 par non-cumulative preferred stock. In 2016, West declared and paid dividends of $4,000. In 2017, West declared and paid dividends of

$20,000. How much of the 2017 dividend was distributed to preferred shareholders? a. $9,000.

b. $15,000.

c. $5,000.

d. None of these answer choices are correct.

 

62. Outstanding stock of the Hall Corporation included 40,000 shares of $5 par common stock and 20,000 shares of 5%, $10 par non-cumulative preferred stock. In 2016, Hall declared and paid dividends of $8,000. In 2017, Hall declared and paid dividends of

$24,000. How much of the 2017 dividend was distributed to preferred shareholders? a. $14,000.

b. $18,000.

c.   $10,000.

d. None of these answer choices are correct.

63. All of the following statements about preferred stock are true except
    1. preferred stock will have a paid-in capital account that is separate from other stock.
    2. preferred stock is presented first on the stockholder's equity section.
    3. preferred stock can be either par value or no-par value.
    4. there can be only one class of preferred stock.

 

 

64. Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 7,000 shares of preferred stock for land with an asking price of $875,000 and a market value of $770,000, which of the following would be the best journal entry for Retro to record?

a. Land                                                                                                                       700,000

Preferred Stock                                                                                                                700,000

b. Land                                                                                                                      770,000

Preferred Stock                                                                                                                770,000

c.   Land                                                                                                                       875,000

Preferred Stock                                                                                                                700,000

Paid-in Capital in Excess of Par - Preferred                                                                                                                                  175,000 d. Land                                                                                                                      770,000

Preferred Stock                                                                                                                700,000

Paid-in Capital in Excess of Par - Preferred                                                              70,000

 

 

65. On January 1, McCarver Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31 the company declared a 10% stock dividend. Market value of the stock was $15/share. As a result of this event,
    1. McCarver’s Paid-in Capital in Excess of Par Value account increased $400,000.
    2. McCarver’s total stockholders’ equity was unaffected.
    3. McCarver’s Stock Dividends account increased $1,200,000.
    4. All of these answer choices are correct.

 

 

66. On January 1, Edmiston Corporation had 2,000,000 shares of $10 par value common stock outstanding. On March 31 the company declared a 10% stock dividend. Market value of the stock was $15/share. As a result of this event,
    1. Edmiston’s Paid-in Capital in Excess of Par Value account increased $1,000,000.
    2. Edmiston’s total stockholders’ equity was unaffected.
    3. Edmiston’s Stock Dividends account increased $3,000,000.
    4. All of these answer choices are correct.

 

67. Which one of the following is not necessary in order for a corporation to pay a cash dividend?
    1. Adequate cash.
    2. Approval of stockholders.
    3. Declared dividends.
    4. Retained earnings.

 

 

68. The date on which a cash dividend becomes a binding legal obligation is on the
    1. declaration date.
    2. date of record.
    3. payment date.
    4. last day of the fiscal year en

 

69. The cumulative effect of the declaration and payment of a cash dividend on a company’s financial statements is to
    1. decrease total liabilities and stockholders’ equity.
    2. increase total expenses and total liabilities.
    3. increase total assets and stockholders’ equity.
    4. decrease total assets and stockholders’ equity.

 

 

70. The board of directors of Bosco Company declared a cash dividend on November 15, 2017, to be paid on December 15, 2017, to stockholders owning the stock on November 30, 2017. Given these facts, the date of November 30, 2017, is referred to as the
    1. declaration date.
    2. record date.
    3. payment date.
    4. ex-dividend date.

 

 

71. Which of the following is the appropriate general journal entry to record the declaration of cash dividends?
    1. Cash Dividends

Cash

1. 2. Dividends Payable

Cash

1. 3. Paid-in Capital

Dividends Payable

1. 4. Cash Dividends

Dividends Payable

 

 

72. The board of directors of Yancey Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2017. The dividend is to be paid on August 15, 2017, to stockholders of record on July 31, 2017. The correct entry to be recorded on July 15, 2017, will include a
    1. debit to Dividends Payable.
    2. debit to Cash Dividends.
    3. credit to Cash.
    4. credit to Cash Dividends.

 

 

73. The board of directors of Yancey Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2017. The dividend is to be paid on August 15, 2017, to stockholders of record on July 31, 2017. The effects of the journal entry to record the declaration of the dividend on July 15, 2017, are to
    1. decrease stockholders’ equity and increase liabilities.
    2. decrease stockholders’ equity and decrease assets.
    3. increase stockholders’ equity and increase liabilities.
    4. increase stockholders’ equity and decrease assets.

 

 

 

 

 

74. The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2017. The dividend is to be paid on August 15, 2017, to stockholders of record on July 31, 2017. The correct entry to be recorded on August 15, 2017, will include a
    1. debit to Cash Dividends.
    2. credit to Cash Dividends.
    3. credit to Dividends Payable.
    4. debit to Dividends Payable.

 

 

75. The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2017. The dividend is to be paid on August 15, 2017, to stockholders of record on July 31, 2017. The effects of the journal entry to record the payment of the dividend on August 15, 2017, are to
    1. decrease stockholders’ equity and decrease liabilities.
    2. decrease liabilities and decrease assets.
    3. increase stockholders’ equity and increase liabilities.
    4. increase stockholders’ equity and decrease assets.

 

 

76. A corporation records a dividend-related liability
    1. on the record date.
    2. on the payment date.
    3. when dividends are in arrears.
    4. on the declaration date.

 

 

77. Common Stock Dividends Distributable is classified as a(n)
    1. asset account.
    2. stockholders’ equity account.
    3. expense account.
    4. liability account.

 

 

78. The effect of a stock dividend is to
    1. decrease total assets and stockholders’ equity.
    2. change the composition of stockholders’ equity.
    3. decrease total assets and total liabilities.
    4. increase the book value per share of common stock.

 

 

79. Stock dividends and stock splits have the following effects on retained earnings:

Stock Splits                    Stock Dividends

1. 1. Increase                            No change
   2. No change                            Decrease
   3. Decrease                             Decrease
   4. No change                          No change

 

 

 

 

80. Regular dividends are declared out of
    1. paid-in capital in excess of par value.
    2. treasury stock.
    3. common stock.
    4. retained earnings.

 

 

81. Which of the following is not a significant date with respect to dividends?
    1. The declaration date.
    2. The incorporation date.
    3. The record date.
    4. The payment date.

 

 

82. On the dividend record date
    1. a dividend becomes a current obligation.
    2. no entry is required.
    3. an entry may be required if it is a stock dividend.
    4. Dividends Payable is debite

 

 

83. Which of the following statements regarding the date of a cash dividend declaration is

not accurate?

1. 1. The dividend can be rescinded once it has been declared.
   2. The corporation is committed to a legal, binding obligation.

 

1. 3. The board of directors formally authorizes the cash dividend.
   4. A liability account must be increase

 

84. Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Total Assets	Total Liabilities	Total Stockholders’ Equity
a.                   Increase	Decrease	No change
b.                No change	Increase	Decrease
c.                  Decrease	Increase	Decrease
d.                  Decrease	No change	Increase

 

 

 

85. Ace Inc. has 10,000 shares of 4%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2017. What is the annual dividend on the preferred stock?
    1. $40 per share
    2. $40,000 in total
    3. $4,000 in total
    4. $0.40 per share

 

86. CAB Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2017. What is the annual dividend on the preferred stock?
    1. $50 per share.
    2. $5,000 in total.
    3. $500 in total.
    4. $0.50 per share.

 

87. Which of the following statements is not true about a 2-for-1 split?
    1. Par value per share is reduced to half of what it was before the split.
    2. Total contributed capital increases.
    3. The market price probably will decrease.
    4. A stockholder with ten shares before the split owns twenty shares after the split.

 

 

88. Sizemore, Inc. has 10,000 shares of 4%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2017. If the board of directors declares a $25,000 dividend, the
    1. preferred stockholders will receive 1/10th of what the common stockholders will receive.
    2. preferred stockholders will receive the entire $25,000.
    3. $25,000 will be held as restricted retained earnings and paid out at some future date.
    4. preferred stockholders will receive $12,500 and the common stockholders will receive $12,500.

 

89. Denson, Inc. has 10,000 shares of 5%, $100 par value, non-cumulative preferred stock and 40,000 shares of $1 par value common stock outstanding at December 31, 2017. There were no dividends declared in 2016. The board of directors declares and pays a

$120,000 dividend in 2017. What is the amount of dividends received by the common stockholders in 2017?

a. $0.

b. $50,000.

c. $120,000.

d. $70,000.

 

90. Brewer Inc. has 5,000 shares of 6%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2017, and December 31, 2016. The board of directors declared and paid a $12,000 dividend in 2016. In 2017, $60,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2017?

a. $42,000.

b. $30,000.

c.   $18,000.

d. $15,000.

 

91. Watson, Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2017. There were no dividends declared in 2015. The board of directors declares and pays a $90,000 dividend in 2016 and in 2017. What is the amount of dividends received by the common stockholders in 2017?

a. $30,000.

b. $40,000.

c.   $50,000.

d. $0.

 

92. Berman Inc. has 6,000 shares of 6%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2016, and December 31, 2017. The board of directors declared and paid an $12,000 dividend in 2016. In 2017, $72,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2017?

a. $48,000.

b. $42,000.

c.   $54,000.

d. $18,000.

 

93. The board of directors must assign a per share value to a stock dividend declared that is
    1. greater than the par or stated value.
    2. less than the par or stated value.
    3. equal to the par or stated value.
    4. at least equal to the par or stated value.

 

 

 

94. A stockholder who receives a stock dividend would
    1. expect the market price per share to increase.
    2. own more shares of stock.
    3. expect retained earnings to increase.
    4. expect the par value of the stock to change.

 

 

95. When stock dividends are distributed,
    1. Common Stock Dividends Distributable is decreased.
    2. Retained earnings is decreased.
    3. Paid-in Capital in Excess of Par Value is debited if it is a small stock dividend.
    4. No entry is necessary if it is a large stock dividen

 

 

96. A small stock dividend is defined as
    1. less than 30% but greater than 25% of the corporation’s issued stock.
    2. between 50% and 100% of the corporation’s issued stock.
    3. more than 30% of the corporation’s issued stock.
    4. less than 20-25% of the corporation’s issued stock.

 

 

 

97. The per share amount normally assigned by the board of directors to a small stock dividend is
    1. the market value of the stock on the date of declaration.
    2. the average price paid by stockholders on outstanding shares.
    3. the par or stated value of the stock.
    4. zero.

 

 

98. Identify the effect the declaration of a stock dividend has on the par value per share and book value per share.

Par Value per Share                      Book Value per Share

1. 1. Increase                                             Decrease
   2. No effect                                             Increase
   3. Decrease                                             Decrease
   4. No effect                                            Decrease

 

 

99. Which of the following show the proper effect of a stock split and a stock dividend?

Item	Stock Split	Stock Dividend
a. Total paid-in capital	Increase	Increase
b. Total retained earnings	Decrease	Decrease
c. Total par value (common)	Decrease	Increase
d. Par value per share	Decrease	No change

 

 

100. A stock split will
     1. have no effect on retained earnings.
     2. increase total paid-in capital.
     3. increase the total par value of the stock.
     4. have no effect on the par value per share of stock.