accounting final

After a corporation declares a cash dividend, what takes place on the date of record? Cash decreases. Liabilities decrease. Equity decreases. No entry is necessary.

No entry is necessary.

On January 15, 2011, Rockney Systems, Inc. paid a cash dividend that had been declared prior to the end of its 2010 fiscal year. The entry to pay the dividends includes a debit to: Cash and a credit to Dividends Payable. Dividends Payable and a credit to Cash. Retained Earnings and a credit to Dividends Payable. Dividends Payable and a credit to Retained Earnings.

Dividends Payable and a credit to Cash.

When a corporation pays a previously declared cash dividend, which of the following is true? Cash increases. Liabilities decrease. Equity decreases. No entry is necessary.

Liabilities decrease.

When a corporation decides whether to pay a cash dividend, which of the following is an important consideration? The balances in the corporation's cash account to determine cash available for dividends. The number of authorized shares of the corporation's stock. The book value of the treasury stock. The balance of paid-in capital in excess of par on the corporation's stock accounts

The balances in the corporation's cash account to determine cash available for dividends.

If a corporation declares a 2-for-1 stock split, which of the following is true? A journal entry is required to show the effect on the stockholders' equity accounts. The stockholders will have a higher proportionate ownership share after the split. The par value will be reduced to half of the pre-split par value. The market price of the stock is expected to increase after the split.

The par value will be reduced to half of the pre-split par value.

What is the primary reason for a stock split? To distribute cash to the investor. To decrease the market value of the stock. To decrease the number of shares outstanding. To increase the capital stock of the corporation.

To decrease the market value of the stock.

Porter Hardware, Inc. issues $2 par common stock. Which of the following is true? $2 per share is presented on the balance sheet in the common stock account. $2 per share is the maximum selling price for these shares of stock. Liabilities will increase as a result of this transaction. $2 in dividends will be paid to the stockholders as a result of this transaction.

$2 per share is presented on the balance sheet in the common stock account.

On June 1, 2011, Donner Technologies declared a $50,000 cash dividend to be distributed to its common stockholders of record on June 15, 2011. The dividend will be paid on July 1, 2011. The required journal entry on June 1 includes a: $50,000 debit to retained earnings. $50,000 debit to dividends payable. $50,000 credit to cash. $50,000 credit to common stock

$50,000 debit to retained earnings.

Petry Corporation issues 20,000 shares of $.50 par common stock for $6 per share. The account for Additional Paid-In Capital in excess of par will increase by: $130,000. $120,000. $110,000. $10,000.

110,000

When is a liability for cash dividends created? At the end of each fiscal year. At the date of declaration. At the date of record. At the date of payment.

At the date of declaration.

When a corporation declares a small stock dividend, which of the following is false? Cash decreases. Total stockholders' equity remains the same. The capital stock accounts increase. Retained earnings decreases.

Cash decreases.

____________________ is the name of the account credited when a corporation issues common stock for a price greater than par

additional paid-in capital

____________________ shares are the maximum number of shares a corporation can legally issue.

authorized

A disadvantage of the corporate form of business entity is: mutual agency for stockholders. unlimited liability for stockholders. corporations are subject to more governmental regulations. the ease of transfer of ownership.

corporations are subject to more governmental regulations.

A distribution of profits to owners is called ____________________.

dividend

The ____________________ ratio is computed by dividing dividends by net income.

dividend payout

The ____________________ ratio is computed by dividing dividends per share by market price per share.

dividend yield

One of the main disadvantages of the corporate form is the: professional management. double taxation of dividends. charter. corporation must issue stock

double taxation of dividends.

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

enhanced because of the limited liability and the ease of share transferability.

Cash paid for preferred stock dividends should be shown on the statement of cash flows under: investing activities. financing activities. both investing and financing activities. operating activities

financing activities.

All of the following are reasons that a corporation may purchase treasury stock except: if it needs the stock for its employee stock bonus program. if it desires to make an investment in its own stock and is reported as an asset. to buy out the ownership of stockholders. to increase the reported amount of earnings per share.

if it desires to make an investment in its own stock and is reported as an asset.

If the stated cash dividend on cumulative preferred stock has been unpaid for a period of one year or more, it is referred to as a dividend ____________________.

in arrears

The number of shares sold to stockholders are ____________________ shares.

issued

The ____________________ is a preferred stock having a feature that provides for the current year dividends only to be paid to preferred stockholders before they are paid to common stockholders

noncumulative preferred stock

The number of shares issued less the number of shares of treasury stock is the ____________________ share

outstanding

Characteristics of a corporation include: shareholders who are mutual agents. direct management by the shareholders (owners). its inability to own property. shareholders who have limited liability

shareholders who have limited liability

When stockholders exchange their shares of stock for additional shares, and there is a corresponding reduction in the par value of the stock, a stock ____________________ has occurred.

split

Cash dividends paid on common stock would be reported in the statement of cash flows in: the cash flows from financing activities section. the cash flows from investing activities section. a separate schedule. the cash flows from operating activities section

the cash flows from financing activities section.

Dividends in arrears are required to be reported in: a liability account. a contra-equity account. the stockholders' equity section of the balance sheet. the notes to the financial statements

the notes to the financial statements

Authorized shares represent the: number of previously issued shares that have been repurchased by the corporation. number of shares that the corporation has sold. number of shares that are currently held by stockholders. maximum number of shares of stock that a company can legally issue.

maximum number of shares of stock that a company can legally issue.

To compute the return on equity ratio, the numerator includes ____________________ and the denominator is the average stockholders' equity.

net income

The ____________________ is a preferred stock having a feature that provides for the current stated dividends plus dividends in arrears before any dividends are paid to the common stockholders

cumulative preferred stock

Which of the following is not a characteristic of a corporation? Corporations are organized as a separate legal taxable entity. Ownership is divided into shares of stock. Corporations experience an ease in obtaining large amounts of resources by issuing stock. A corporation's resources are limited to their individual stockholders' resources.

A corporation's resources are limited to their individual stockholders' resources.

The excess of sales price of treasury stock over its cost should be credited to: Treasury Stock Receivable Premium on Capital Stock Additional Paid-In Capital Income from Sale of Treasury Stock

Additional Paid-In Capital

Issued stock that is repurchased by the corporation but not retired is ____________________

treasury stock

Which of the following statements is true with regard to equity capital? The number of shares actually in the hands of stockholders are called outstanding shares. It is unusual for corporations to have more than one class of stock outstanding at any point in time. Preferred stock represents the shares of stock that have been permanently retired. Issued shares represent the maximum number of shares that can be issued by a corporation.

The number of shares actually in the hands of stockholders are called outstanding shares.

Par value represents the: arbitrary amount that establishes a minimum price for the stock when it is first issued. current market price of the stock. amount for which any treasury shares have been acquired by the corporation. amount for which treasury shares may be reissued.

arbitrary amount that establishes a minimum price for the stock when it is first issued.

Under the corporate form of business organization: ownership rights are easily transferred. a stockholder is personally liable for the debts of the corporation. stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. stockholders wishing to sell their corporation shares must get the approval of other stockholders.

ownership rights are easily transferred.

An arbitrary monetary amount that determines an entity's legal capital is the ____________________.

par value

Brumfield, Inc. issued 7,000 shares of $1 par common stock for $20 per share. In addition to the increase in cash, what effectdoes this transaction have on Brumfield's accounting equation? Common stock increases $7,000 and retained earnings increases $133,000. Common stock increases $7,000 and additional paid-in capital in excess of par increases $133,000. Common stock increases $140,000. Retained earnings increases $7,000 and additional paid-in capital in excess of par increases $133,000.

Common stock increases $7,000 and additional paid-in capital in excess of par increases $133,000.

In which of the following organization forms are the owners' legal responsibility for the debt of the business limited to the amount they invested in the business? Sole proprietorship Corporation Partnership Cooperative

Corporation

A corporation issues 1,500 shares of common stock for $32,000. The stock has a par value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for: $15,000. $32,000. $17,000. $2,000.

$15,000.

If a corporation declares a 2-for-1 stock split, which of the following is true? The amount of stockholders' equity doubles as a result of the split. The amount of capital stock doubles as a result of the split. The price of each share will be doubled as a result of the split. A stockholder who previously held 100 shares will have 200 shares after the split.

A stockholder who previously held 100 shares will have 200 shares after the split.

Which of the following is not characteristic of a corporation? The financial loss that a stockholder may suffer from owning stock in a public company is limited. Cash dividends paid by a corporation are deductible as expenses by the corporation. A corporation can own property in its name. Corporations are required to file federal income tax returns.

Cash dividends paid by a corporation are deductible as expenses by the corporation.

Alma Corp. issues 1,000 shares of $10 par value common stock at $16 per share. When the transaction is recorded, a credit or credits are made to: Common Stock $16,000. Common Stock $10,000 and Additional Paid-in Capital $6,000. Common Stock $6,000 and Additional Paid-in Capital $10,000. Common Stock $10,000 and Retained Earnings $6,000

Common Stock $10,000 and Additional Paid-in Capital $6,000.

Select the type of business that is most likely to obtain large amounts of resources by issuing stock. Partnership Corporation Sole proprietorship None are correct

Corporation

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

Government regulation

When a corporation declares a cash dividend, which of the following is true? Cash decreases. Liabilities decrease. Equity decreases. No entry is necessary.

Equity decreases.

When a corporation declares a stock dividend, which of the following is true? Cash decreases. Equity remains the same. Equity decreases. Retained earnings increases.

Equity remains the same.

Treasury shares represent the: number of previously issued shares that have been repurchased by the corporation. number of shares that the corporation has sold. number of shares that are currently held by stockholders. maximum number of shares that can be sold by the corporation.

number of previously issued shares that have been repurchased by the corporation.

Outstanding shares represent the: number of previously issued shares that have been repurchased by the corporation. number of shares that the corporation has sold. number of shares that are currently held by stockholders. maximum number of shares that can be sold by the corporation.

number of shares that are currently held by stockholders.

Issued shares represent the: number of previously issued shares that have been repurchased by the corporation. number of shares that the corporation has distributed to owners to date. number of shares that are currently held by stockholders. maximum number of shares that can be sold by the corporation.

number of shares that the corporation has distributed to owners to date.

Which of the following statements is true regarding a corporation's purchase of treasury stock? The cost of treasury stock is a reduction in stockholders' equity. Dividends must still be paid on treasury stock because it is still issued. Treasury stock is reported as an asset because it is considered an investment in the corporation's own stock. Treasury stock is no longer considered issued once it is back in the hands of the issuer.

The cost of treasury stock is a reduction in stockholders' equity.

Which of the following statements is false regarding the issuance of stock versus bonds to raise capital for a corporation? The declaration of dividends reduces the amount of the corporation's taxable income. Interest accrues; whereas, dividends do not accrue. The payment of bond interest is a contractual requirement. The declaration of dividends is at the discretion of the board of directors.

The declaration of dividends reduces the amount of the corporation's taxable income.

Prady, Inc. began operations on October 1, 2011, with 3,000 shares of $2 par common stock authorized. Prady issued all of its common stock during 2011 and 2012. On December 31, 2012, Prady repurchased 1,000 shares of its outstanding shares, then reissued 500 of these shares on March 1, 2013. On June 1, 2013, Prady declared a 2-for-1 stock split. As a result of this stock split, which of the following is true? Assets decreased. Stockholders' equity decreased. Stockholders' equity increased. Total stockholders' equity remained the same

Total stockholders' equity remained the same

On the statement of cash flows, the cash flows from financing activities section would include: receipts from the sale of investments. payments for the acquisition of investments. receipts from a note receivable. receipts from the issuance of capital stock.

receipts from the issuance of capital stock.

Earnings per share is an indication of how much: the company has in cash for each share of outstanding common stock. the company earned for each share of outstanding common stock. the company paid as dividends for each share of common stock held by stockholders. the company earned for each share of outstanding common and preferred stock

the company earned for each share of outstanding common stock.