CORPORATION
Limited liability means that even in the event of bankruptcy, stockholders in a corporation can lose no more than the amount they invested in the company.
True
Stock repurchases reduce the number of shares outstanding, thereby increasing earnings per share.
True
The cost of a noncash asset acquired in exchange for common stock should be either the fair market value of the consideration given up or the consideration received, whichever is more clearly determinable.
True
The number of common shares outstanding can never be greater than the number of shares issued.
True
The number of shares outstanding is equal to the number of shares issued minus the number of shares bought back.
True
The source-of-capital approach is one way to set up stockholders' equity.
True
Total assets, total liabilities, and total stockholders' equity do not change as a result of a stock dividend.
True
Treasury stock is the repurchase of a company's own issued stock
True
Treasury stock should not be classified as a current asset.
True
Under the cost method, Treasury Stock is debited at the price paid to reacquire the shares, and the same amount is credited to Treasury Stock when the shares are sold.
True
We record treasury stock at the cost of the shares reacquired.
True
When no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock becomes legal capital.
True
When treasury stock is reissued, the difference between its cost and the cash received is reported as an increase/decrease in additional paid-in capital.
True
Dividends Payable is recorded at the date of record.
False
Dividends are paid on all shares issued by the company including treasury stock.
False
Holders of common stock receive dividends before holders of preferred stock
False
If net income is overstated, retained earnings will be understated.
False
In calculating dividends, the amount allocated to common and preferred would be based on total market value.
False
Retained Earnings is an asset.
False
The stockholders' equity section of a corporation's balance sheet consists of (1) paid-in capital, (2) retained earnings, and (3) drawings.
False
Small stock dividends are recorded by debiting Retained Earnings for the par value per share.
False
Stock can be issued only in exchange for cash.
False
Stock dividends will reduce stockholders' equity.
False
Subscription Receivable—Common Stock is an asset.
False
The Common Stock Subscribed account increases with a debit.
False
Treasury stock is an asset.
False
No journal entry is made to record a stock split.
True
Paid-in Capital is the amount stockholders have invested in the company.
True
Preemptive rights allow a stockholder to maintain his or her proportionate ownership in a company.
True
Retained earnings are a part of stockholders' equity.
True
Retained earnings represent the earnings retained in the corporation - earnings not paid out as dividends to stockholders.
True
"Retained earnings" means cash
False
If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation. Answer:
False
Net income or loss can be seen on the statement of retained earnings.
True
Small stock dividends are recorded by debiting Retained Earnings for the fair value per share.
True
Treasury stock is a contra stockholders' equity account.
True
Noncumulative stock means that you have rights to prior dividends.
False
A company credits Additional Paid-in Capital for the portion of the cash proceeds above par value received for the issuance of stock.
True
A corporation acts under its own name rather than in the name of its stockholders.
True
A corporation can be organized for the purpose of making a profit or it may be nonprofit.
True
A reduction in retained earnings is a debit.
True
A stockholder has the right to vote in the election of the board of directors.
True
Treasury stock is a contra-liability.
False
If stock is sold for a value higher than par value, the Paid-In Capital In Excess Of Par account will be credited.
True
Earnings per share (EPS) measures the net income earned per share of common stock outstanding.
True
A corporation is not an entity which is separate and distinct from its owners.
False
A cumulative dividend means that you have no right to past dividends.
False
Authorized stock is the number of shares that have been sold to investors.
False
Cash is not involved in the purchase of treasury stock.
False
Common Stock Subscribed is recorded at market value.
False
Common stock is an asset.
False
Cumulative preferred stock means that dividends accumulate interest during the year.
False
Dividends Payable is an asset.
False
Par value has a direct relationship to the market value of the common stock.
False
Retained Earnings is the same as cash.
False
Retained earnings are subtracted from paid-in capital to arrive at total stockholders' equity.
False
Selling common stock for cash will result in a debit to common stock.
False
The acquisition of treasury stock by a corporation increases total assets and total stockholders' equity
False
The cash proceeds from issuing par value stock may be equal to or greater than, but not less than par value.
False
The par value of common stock must always be equal to its market value on the date the stock is issued.
False
Treasury stock can be reissued only at a price below the cost of reacquiring the stock.
False
Treasury stock is a contra-equity account since treasury stock increases total stockholders' equity.
False
Treasury stock purchased for P25 per share that is reissued at P20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement.
False
When retained earnings is appropriated, cash is involved.
False
All publicly held corporations are regulated by the Securities and Exchange Commission.
True
Any dividends declared will be shown on the statement of retained earnings.
True
Common Stock Dividend Distributable uses par value in its calculation.
True
Corporations cannot legally sell stock at less than stated value.
True
Dividends are declared out of retained earnings.
True
