AC2 Chap 15

Stockholders' equity is generally classified into two major categories:

retained earnings and contributed capital.

Stock issued in non-cash transactions should be recorded at the: Par value of the stock issued. Fair market value of the stock issued. Fair market value of the property received. Fair market value of the stock issued or the property received, whichever is more readily determinable.

Fair market value of the stock issued or the property received, whichever is more readily determinable.

A property dividend should be recorded in retained earnings at the property's

Market value at date of declaration.

Which of the following best describes a possible result of treasury stock transactions by a corporation? May increase but not decrease retained earnings. May decrease but not increase retained earnings. May decrease but not increase net income. May increase net income if the cost method is used.

May decrease but not increase retained earnings.

Which of the following features of preferred stock makes the security more like debt than an equity instrument?

Redeemable

Which of the following dividends does not reduce total stockholders' equity? Cash dividends. Stock dividends. All of these answer choices reduce total stockholders' equity. Liquidating dividends.

Stock dividends.

Which of the following increases the number of shares outstanding and decreases the par value per share? Treasury stock. Small stock dividend. Large stock dividend. Stock split.

Stock split.

All of the following decrease Retained Earnings, except: Property dividends. Stock dividends. Cash dividends. Stock splits.

Stock splits.

Which one of the following is not a right of common stockholders? To share proportionately in profits and losses. To share proportionately in all management decisions. To share proportionately in corporate assets upon liquidation. To share proportionately in any new issues of stock of the same class.

To share proportionately in all management decisions

Which of the following does not represent a pair of GAAP/IFRS-comparable terms? Treasury stock/Repurchase reserve. Common stock/Share capital—ordinary. Additional paid-in capital/Share premium. Preferred stock/Preference shares.

Treasury stock/Repurchase reserve.

T/F Cash dividends are not declared or paid on treasury stock.

True

T/F Many corporations restrict retained earnings or dividends without any formal journal entries.

True

T/F Preferred stock has no voting rights.

True

T/F Redeemable preferred stock should be classified as a liability on the balance sheet.

True

Cumulative preferred dividends in arrears should be shown in a corporation's financial statements as

a footnote.

All of the following statements are true regarding preferred stock except: the dividend preference for preferred stock is expressed as a percentage of the par value. companies usually issue preferred stock with a par value. a preference as to dividends assures the payment of dividends. a company often issues preferred stock instead of debt, because of a high debt-to-equity ratio

a preference as to dividends assures the payment of dividends.

Additional paid-in capital is not affected by the issuance of:

no-par stock

Common stock dividends distributable is reported on the balance sheet as:

an addition to common stock.

The term reserves is used under IFRS with reference to all of the following except: gains and losses on revaluation of property, plant, and equipment. capital received in excess of the par value of issued shares. retained earnings. fair value differences.

capital received in excess of the par value of issued shares.

In every corporation the one class of stock that represents the basic ownership interest is called

common stock

The residual interest in a corporation belongs to the common stockholders. management. preferred stockholders. creditors.

common stockholders.

The type of preferred stock that would generate a dividend in arrears is:

cumulative preferred stock

Cash dividends are paid on the basis of the number of shares

outstanding

When a property dividend is declared, Retained Earnings is reduced by the:

fair value of the property.

The residual interest in a corporation belongs to

the common stockholders

Characteristics of the corporate form of organization include all of the following except: facility for attracting and accumulating large amounts of capital. unlimited liability of stockholders. capital stock or share system. variety of ownership interests.

unlimited liability of stockholders

All of the following are features of preferred stock except: voting rights. preference as to dividends. callable at the corporation's option. convertible into common stock.

voting rights.