ACC chapter 18 smart book
a restriction of retained earnings
-indicates managements intention to withhold assets for a specified purpose -communicates the portion of retained earnings not available for dividends
state laws regulate which of the following corporate activities
-nature of share authorization -repurchase of stock -issuance of stock
preferred stock is similar to a bond when it has which of the following features
-a dividend rate -a mandatory redeemable feature
when a company issues its shares of stock for a noncash asset, which of the following may provide evidence of fair value of the transaction
-an independent appraisal of the value of the asset -the quoted market price for the shares -the amount of cash that would be paid to purchase the asset
In year 1, Boise purchased 10,000 shares of treasury stock for $5 per share. In year 3, Boise reissued 1,000 shares of treasury stock for $8 per share. The journal entry to record the transaction in year 3 will include
-credit to paid in capital from treasury stock for $3000 -credit treasury stock for $5000
if more than one class of shares is authorized, what type of information must be specified
-designation to distinguish each class -specific rights for each class
corporations raise capital by
-issuing stock -operating at a profit -issuing debt
which of the following has limited liability for its owners but passes income through to its investors and avoids double taxation
S corporation
mandatorily redeemable preferred stock is reported as
a liability on the balance sheet
which account is a stockholders equity account
additional paid in capital
How should cash dividends be reported on the statement of shareholders' equity?
as a reduction of retained earnings
how should cash dividends be reported on the statement of shareholders equity?
as a reduction of retained earnings
which is subject to double taxation
corporations
ex- dividend date
date before which investors must purchase stock in order to receive a dividend
record date
date that a determination is made as to recipients of a dividend
payment date
date that corporate assets are transferred to shareholders
declaration date
date that the corporate board of directors announces a dividend
when a company issues different classes of shares it must
distinguish the rights for each class of stock
when a corporation distributes assets of the company to its investors, it is referred to as a(n)
dividend
a liquidating dividend means that
dividends exceed retained earnings
when a corporation repurchases its stock as treasury stock, the number of shares authorized _____
does not change
the balance sheet should disclose the sources of changes in the stockholders equity account
false
when stock splits or stock dividends result in fractional shares, the situation is handled by
issuing cash payments for the fractional shares
in a corporation, shareholders liability is
limited to the amount of the investment
the return on shareholders equity ratio is computed by dividing
net income by average shareholders equity
which type of stock usually has a high par value and percentage of par value dividend rate?
preferred stock
the effect of share issue costs is to
reduce paid in capital in excess of par
when a corporation repurchases its stock as treasury stock, the number of shares issued ______
remains the same
balance sheet
reports amounts of shareholders equity at end of reporting periods
statement of stockholders equity
reports sources of the changes in stockholders equity accounts
a corporations accumulated, undistributed net income or loss is referred as
retained earnings
amounts earned by the corporation on behalf of its shareholders referred to as
retained earnings
if a company wishes to increase its stock prices it might declare an ____ stock split
reverse
the ownership interests of the investors in a corporation are referred to as
shareholders equity
which type of dividend does not reduce the assets of the firm or create a liability?
stock dividend
the costs for legal, promotional and accounting services to issue stock should be
subtracted from the proceeds of issuing stock
historically, par value was considered to be
the amount of net assets that were not available for distribution to shareholders
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
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
if a corporation issues its shares of stock for noncash asset, at which amount should the transaction be recorded?
the fair value of the stock
shares of stock previously sold by the corporation that are repurchased are called
treasury stock
when does a dividend become a liability to a corporation
when it is declared by the board of directors
A company originally issues par value common stock at an amount above par. Subsequently, the company reacquires the shares for more than the issue price and immediately retires the shares. The company has no previous transactions for stock repurchases. Which of the following accounts would be reduced for the repurchase and retirement of the shares?
-paid in capital in excess of par -retained earnings -common stock
who regulates the nature of shares that can be authorized, the issuance and repurchase of those shares, and the distribution to shareholders
the state in which the corporation is incorporated