INTER 3120 CH.18

Cash and property dividends ______ total equity, and stock dividends _______ total equity.

decrease do not effect

Corporations raise equity capital by

-issuing stock -operating at a profit.

Which account is a stockholders' equity account?

Additional paid-in capital

Retained earnings is typically reported on the balance sheet

As a single amount

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

Credit common stock for the par amount.

True or false: The return on shareholders' equity ratio is calculated as net income DIVIDED by common stock.

False Should be avg shareholder's equity

Large stock dividend

Reduce retained earnings by par; increase common stock by par.

Small stock dividend

Reduce retained earnings for fair value; increase common stock by par value; increase additional paid-in capital.

Property dividend

Reduce retained earnings, recognize gain on appreciation on income statement.

cash dividend

Reduce retained earnings; reduce a current asset.

Owners of _________ corporations have the limited liability of a corporation, but income and expenses are passed through the owners as in a partnership, avoiding double taxation.

S

A business that has equity accounts labeled "common stock" and "retained earnings" is a

corporation

If preferred shares must be redeemed by a certain date, they should be classified

debt.

The purpose of the statement of shareholders' equity is to

report the changes and the sources of the changes in shareholder equity accounts.

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

Preferred stock

Which of the following accounts are classified as shareholders' equity?

Preferred stock Additional paid-in capital Net unrealized holding gains on investments

A restriction of retained earnings signifies thata portion of retained earnings is not available for dividends.

a portion of retained earnings is not available for dividends.

Net assets is

assets less liabilities.

A restriction of retained earnings:

indicates management's intention to withhold assets for a specified purpose communicates the portion of retained earnings not available for dividends

A corporation is owned by its

stockholders

Which of the following accounts are classified as shareholders' equity?

-additional paid-in capital -retained earnings -common stock

property dividend

.A nonreciprocal transfer to owners is referred to as a

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.

In year 1, Rim Corporation purchases 1,000 shares of treasury stock for $10 per share. In year 2, Rim reissues 100 shares of the treasury stock for $12 per share. In year 3, Rim reissues 500 shares of its treasury stock for $9 per share. The journal entry to record the reissuance of treasury stock in year 3 will include which of the following entries?

Debit paid-in capital—share repurchase $200. Debit cash $4,500 Debit retained earnings $300. Credit treasury stock $5,000

treasury stock

Shares of stock previously sold by the corporation that are repurchased are called

When investors purchase shares of stock, it is classified as

paid-in capital.

Fantastic Gold Inc. declares and distributes to its shareholders 1 gram of gold in lieu of a cash dividend. Fantastic Gold is distributing a(n)

property dividend. -a non cash asset was distrubuted

Historically, par value was considered to be:

the amount of net assets that were not available for distribution to shareholders.

Which of the following may be a source of paid-in capital?

-Share-based compensation activities -Company sells stock to investors -Company repurchases some of its outstanding common stock

Which of the following items are included in other comprehensive income?

-adjustments from foreign currency translations -net holding gains and losses on certain types of investments

Which of the following items are included in other comprehensive income? #2

-gains and losses from amendments to postretirement programs -deferred gains and losses on derivatives -net holding gains and losses on certain types of investments

A property dividend:

-is a noncash distribution to owners. -reduces retained earnings.

State laws regulate which of the following corporate activities?

-nature of share authorization -repurchase of stock -issuance of stock

Which of the following accounts might a corporation use to record changes in its ownership interests during a reporting period?

-retained earnings -accumulated other comprehensive income -common stock

If more than one class of shares is authorized, what type of information must be specified?

-specific rights for each class -designation to distinguish each class

True or false: When investors purchase shares of stock from a corporation, it is recorded by the corporation as investments in securities.

False

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

the market price per share decreases.

Historically, par value indicated:

-the amount of net assets that were not available for distribution to shareholders. -the real value of shares -the issue price of all shares

In year 1, Goal Corp. purchases 1,000 shares of treasury stock for $10 per share. In year 2, Goal reissues 500 shares of the treasury stock for $13 per share. In year 3, Goal reissues 200 shares of its treasury stock for $8 per share. The journal entry to record the reissuance of treasury stock in year 3 will include which of the following entries?

400 ($10-$8) x 200 shares)

When a corporation repurchases its stock as treasury stock, the number of shares outstanding

Decreases

A company that repurchases its own securities accounts for the shares of stock as

retired shares or treasury shares.

When a company issues different classes of shares, it must

distinguish the rights for each class of stock.