ACCT 387, 18

a corporation's accumulated, undistributed net income or loss is referred as

retained earnings

when a company repurchases its stock and immediately retire the stock, which of the following occurs?

the equity accounts are reduced for the amount in which the shares were originally sold

A 2-for-1 stock split increases the marketability of the stock because

the market price per share decreases

When a company issues its shares of stock for a noncash asset, who h of the following may provide evidence of fair value of the transaction?

the quoted market price for the shares The amount of cash that would be paid to purchase the asset An independent appraisal of the value of the asset

Which of the following transactions are classified as a stock dividend?

A distribution of additional shares of a corporation's stock to current shareholders of the corporation

A property dividend

A non cash asset Reduces retained earnings

When a company issues different classes of shares it must

Distinguish the rights for each class of stock

Preferred stockholders usually have preference over common stockholders with respect to these items

Distribution of assets in liquidation Dividends

Mandatorily Redeemable Preferred Stock is reported as

Liability on the balance sheet

Which type of stock usually has a high par value and a percentage of par value dividend rate

Preferred stock

The costs for legal, promotional, and accounting services to issue stock should be

Subtracted from the proceeds of issuing stock

When a company repurchases its stock and immediately retires the stock, which of the following occurs?

The equity accounts are reduced for the amount in which the shares were originally sold

net assets is

assets less liabilities

When a corporation issues shares of common stock for am amount above par, which of the following entries occur?

credit to additional paid-in capital credit to common stock

when common stock has a designated par value, and common stock is issued at an amount above par, which entry is recorded?

credit to common stock for the par amount

when a corporation repurchases its stock as treasury stock, the number of shares authorized

does not change

characteristics of treasury stock

it has no voting rights It is stock that is repurchased by the company It does not receive a dividend

When the dividend exceeds the balance in retained earnings, the excess is referred to as a

liquidating dividend

a reverse stock split requires

no journal entry

which of the following accounts would be reduced for the repurchase and the retirement of the shares?

paid-in capital in excess of par common stock retained earnings

Mueller Company issues one share in exchange for two outstanding shares of common shares. Mueller must have had a:

reverse stock split

When a company decreases its outstanding shares of stock by exchanging 1 share of stock for 10 shares, this is referred to as(n)

reverse stock split

Distributions of stock to current shareholders of a corporation are called what type of distribution?

stock dividend

the term treasury stock refers to

stock that is repurchased and not retired

When a corporation issues two securities for a single price and the market value of only one security is known, how is the cash received allocated?

the cash received is allocated first to the security for which the fair value is known, and the remainder is allocated to the other security

If a corporation issues its shares of common stock for a noncash asset, at what amount should the transaction be recorded?

The fair value of the stock

when a company repurchases its own shares of stock, what are the two acceptable accounting choices for the transaction?

The shares can be called treasury shared The shared can be formally retired

When does a dividend become a liability to a corporation?

When it is declared by the board of directions

A restriction of retained earnings signifies that

a portion of retained earnings is not available for dividends

A nonreciprocal transfer to owners is referred to as

property dividend

The effect of share issue cost is to

reduce paid-in capital in excess of par

A frequent reason for a stock split is to

reduce stock price per share