Chapter 14

The preemptive right allows stockholders the right to vote for directors of the company....

False : Allows stockholder to keep same value as company grows

The balance in Common Stock Dividend Distributable should be reported as a(n)

Additional to capital stock

The residual interest in a corporation belongs to the

Common stockholders

An entry is not made on the

DATE OF RECORD

A corporation declared a dividend, a portion of which was liquidating. How would this distribution affect APIC and R/E?

Decrease both accounts

What effect does the issuance of a 2-for-1 stock split have on PAR value per share. AND R/E

Decreases--> PAR VALUE PER SHARE No Change --> R/E

Stock splits and STOCK Divendencs both....

NO effect on total S/E

Quirk Corporation issued a 100% stock dividend of its common stock which had a par value of $10 before and after the dividend. At what amount should retained earnings be capitalized for the additional shares issued?

PAR VALUE

When a corporation sells treasury stock below its cost, it usually debits the difference between cost and selling price to Paid-in Capital from Treasury Stock.

TRUE

When a stock dividend is less than 20-25 percent of the common stock outstanding, a company is required to transfer the fair value of the stock issued from retained earnings.

TRUE

Dividends are NOT Paid on

Treasury Stock

At the date of declaration of a small common stock dividend, the entry should not include

a credit to Common Stock

The declaration and issuance of a STOCK dividend larger than 25% of the shares previously outstanding

decreases retained earnings but does not change total stockholders' equity.

Stockholders' equity is generally classified into two major categories:

earned capital and contributed capital.

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

outstanding.

"Gains" on sales of treasury stock (using the cost method) should be credited to

paid-in capital from treasury stock

STOCK DIVDENDS do not ....

reduce S/E

The cumulative feature of preferred stock

requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders.