Accounting ch. 11, ACCT 2081 Chapter 11SB Homework

Wyanot Company issued 1,000 shares of its 5%, $100 par value, cumulative preferred stock for $110 cash per share. The journal entry to record this transaction includes a ______. (Check all that apply.)

$100,000 credit to Preferred Stock; $110,000 debit to Cash; $10,000 credit to Additional Paid-In Capital - Preferred

The purpose of the statement of partners' capital is to show each partner's ____________. (check all that apply) 1) share of retained earnings 2) share of net income earned during the year 3) contributions during the year 4) drawings during the year

2) share of net income earned during the year 3) contributions during the year 4) drawings during the year

A stock dividend causes the stock price per share to _____________. 1) remain the same 2) increase 3) decrease

3) decrease

A distribution of a company's accumulated prior earnings is a(n) ___________. 1) asset 2) retained earnings 3) dividend 4) expense

3) dividend

After a 3-for-1 stock split, the par value of each stock is ___________ the par value prior to the split. 1) 3 times 2) the same as 3) one third

3) one third

Stock options are given to __________. 1) increase retained earnings 2) increase a corporation's liquidity 3) provide a corporation with the choice of issuing different types of stock, such as preferred stock 4) provide incentives for employees to work harder

4) provide incentives for employees to work harder

Issuing 1,000 shares of 5%, $100 par value, cumulative preferred stock for $110 in cash per share affects the accounting equation by ______. (Check all that apply.)

increasing total stockholders' equity; increasing total assets; increasing Additional Paid-in Capital

Preferred stock generally ____________ preference as to dividends. 1) has 2) does not have

1) has

Stockit, Inc. issued 100,000 shares of the 1,000,000 shares it is allowed to issue. Stockit has repurchased 10,000 of its own shares. The number of shares authorized equals ______ shares.

1,000,000

Corporations can raise large amounts of money because ____________. 1) the unlimited liability feature makes corporate ownership attractive to investors 2) all investments in corporate stock earn money for investors 3) corporate earnings are not taxed 4) shares of stock in public companies can easily be bought and sold by investors

4) shares of stock in public companies can easily be bought and sold by investors

The dividend payment date is when ______.

Cash is paid to satisfy the dividend liability

The closing entry of a sole proprietorship requires the revenues to be ____________ and the Capital account to be ____________.

Debited & credited

When Dive, Inc., declared a $10,000 cash dividend, i recorded a debit to ___________ and a credit to dividends ___________.

Dividends & Payable

The dividend payment date is when ______. (Check all that apply.)

Dividends Payable is decreased Cash is decreased

If a company's EPS falls from $5 to $3, then investors may expect ______.

a reduction in the stock price

Before dividends can be paid to common stockholders, the ______ preferred stockholders must be paid ______.

cumulative; dividends in arrears

Dividends Payable is recorded as a credit on the ______.

declaration date

Mega Corporation repurchased 1,000 shares of its $1 par value common stock for $8,000. The effect of this transaction on the accounting equation includes a(n) ______. (Check all that apply.)

decrease in stockholders' equity; decrease in assets

A stock dividend ______. (Check all that apply.)

distributes additional shares of stock to existing stockholders on a pro rata basis; causes retained earnings to decrease

Similar to a sock split, a stock __________ also distributes additional shares of stock to existing stockholders on a pro rata basis at no cost to the stockholders.

dividend

Similar to a stock split, a stock ________ also distributes additional shares of stock to existing stockholders on a pro rata basis at no cost to the stockholders. (Enter one word per blank.)

dividend

A distribution of a company's accumulated prior earnings is a(n) ______.

dividends

A corporation's board of directors could prefer a stock split to a stock dividend because a stock split ______.

does not reduce retained earnings, so it does not reduce the ability to declare a cash dividend in the future

Preferred stockholders ______.

have the right to receive dividends only in the years the board of directors declares dividends

An increase in EPS is an indicator of ______.

higher profitability

Issuing 1,000 shares of 5%, $100 par value, cumulative preferred stock for $100 cash per share affects the accounting equation by ______. (Check all that apply.)

increasing total stockholders' equity; increasing total assets

The number of shares outstanding equals the number of shares ______.

issued minus the number of shares in treasury

After a 3-for-1 stock split, the par value of each stock is ______ the par value prior to the split.

one third

Stock options are given to ______.

provide incentives for employees to work harder.

The selling of additional new shares after an IPO are referred to as ______.

seasoned offerings

An IPO ______. (Check all that apply.)

stands for initial public offering; is when a private company goes public

A corporation is owned by its ________. (Enter one word per blank.)

stockholders

Treasury stock is reported in the ______.

stockholders' equity section of the balance sheet

Seasoned offerings are ______.

the selling of additional new shares after an IPO

Which of the following are typical benefits to being a shareholder? (Check all that apply.)

voting rights; dividends; residual claim

Advantages of debt financing over equity financing include that ___________. (check all that apple) 1) stockholders' control will not be diluted 2) interest payments are optional 3) interest payments are tax deductible 4) debt financing does not require repayments

1) stockholders' control will not be diluted 3) interest payments are tax deductible

An organization that must have two or more co-owners is called a(n) ____________.

Partnership

X-Co issued 1,000 shares of its 5%, $100 par value, cumulative preferred stock for $100 cash per share. The journal entry to record this event includes a ______. (Check all that apply.)

$100,000 debit to Cash; $100,000 credit to Preferred Stock

Refurbish, Inc. bought 1,000 shares of its own stock for $8,000. Later, it resold the shares for $10,000. The journal entry to record the sale of treasury stock includes a(n) ______. (Check all that apply.)

$2,000 credit to Additional paid-in capital; $8,000 credit to Treasury stock

The effect of a large stock dividend on the accounting equation includes _____________ in retained earnings. 1) a decrease 2) an increase 3) no change

1) a decrease

AnuU, Inc. sold 100,000 shares of the 1,000,000 shares it is allowed to sell. AnuU repurchased 10,000 of these shares. The number of shares issued equals ______ shares.

100,000

True or false: After an initial sale of stock to the public by X, Inc., when investors sell their shares in secondary markets, X's total stockholders' equity will increase.

False

Select those statements below that are true about cash dividends. (Check all that apply.)

On the payment date, current assets are decreased; On the declaration date, liabilities are increased.

Dividends on preferred stock are attractive to some investors, such as retirees or company founders, who want stable income from their investments. T/F

True

The mutual agreement between partners is described in a partnership ___________.

agreement

The declaration of a dividend results in ______. (Check all that apply.)

an increase in liabilities; a decrease in retained earnings

Ownership structure can vary from one company to another, but the most basic form of corporation offers ______.

common stock

Treasury stock is reported in the financial statements as a(n) ______.

contra equity account

The owners of a(n) ____________ are not personally responsible for the debts of the business.

corporation

The closing entry requires a ___________ to drawings and a __________.

credit & debit

A corporation's board of directors is ______.

elected by its stockholders

The date of record is the date on which the corporation ______.

finalizes its list of stockholders who will receive dividends

A major advantage of the corporate form of ownership is ________ legal liability. (Enter one word per blank.)

limited

A major advantage of the corporate form of ownership is _________ legal liability.

limited

A major advantage of the corporate form of ownership is ______.

limited legal liability

Stockit, Inc. issued 100,000 shares of the 1,000,000 shares authorized. Stockit has repurchased 10,000 of its shares. The number of shares authorized represents the ______. (Check all that apply.)

maximum number of shares Stockit is allowed to issue

The declaration date is the date on which the corporation ______.

records its obligation to pay a dividend

When a company has both common and preferred stock, its ROE must be adjusted by ___________. (check all that apply) 1) subtracting preferred stock dividends from net income 2) adding the preferred stock dividends to net income 3) adding the preferred stock balance to to total stockholders' equity 4) subtracting the preferred stock balance from total stockholders' equity

1) subtracting preferred stock dividends from net income 4) subtracting the preferred stock balance from total stockholders' equity

retained earnings of $100,000 represent a porporation's cumulative earnings ____________ and is shown on the __________. 1) kept; balance sheet and statement of retained earnings 2) declared; statement of retained earnings 3) in cash; balance sheet

1) kept; balance sheet and statement of retained earnings

The owner of a sole proprietorship pays personal income taxes ___________. 1) only on the owner's individual income tax return 2) twice-both on the company's income tax return and again on the owner's individual income tax return 3) only on the company's income tax return

1) only on the owner's individual income tax return

A higher ROE means ___________. (check all that apply) 1) stockholders may enjoy higher returns 2) more shares of stock have been issued 3) the P/E ratio must have decreased 4) the company used financial leverage to its stockholders' advantage

1) stockholders may enjoy higher returns 4) the company used financial leverage to its stockholders' advantage

Vests, Inc. has 1,000 shares of 5%, par $100 preferred stock and 10,000 shares of $1 par value common stock outstanding. If the common stockholders received $2 per share in dividends, then the preferred stock dividend was ______ per share.

$5

Dilution Solutions, Inc. repurchased 500 shares of its $2 par value common stock for $10,000. The journal entry to record this transaction includes a ______. (Check all that apply.)

$10,000 debit to Treasury Stock; $10,000 credit to Cash

On January 1, 2017, Bank & Rupp, Inc. issued 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value, 6%, cumulative preferred stock. No dividends were declared in 2017. In 2018, Bank & Rupp declared and paid a $1 dividend to its common stockholders. Assuming all shares originally issued are outstanding, the total dividend paid to the preferred stockholders equals ______.

$6,000

Daffy Duct, Inc. issued 10,000 shares of $1 par value common stock at $10 per share. The journal entry to record this transaction includes a ______. (Check all that apply.)

$90,000 credit to Additional Paid-In Capital; $10,000 credit to Common Stock; $100,000 debit to Cash

A corporate charter is the same as its ___________. 1) annual report to stockholders 2) articles of incorporation 3) annual report filed with the SEC

2) articles of incorporation

contributed capital of $1,000,000 is found in the ___________ section of the ___________. 1) retained earnings; balance sheet 2) operating income; income statement 3) stockholders' equity; balance sheet 4) retained earnings; income statement

3) stockholders' equity; balance sheet

The number of shares issued represents the number of shares ____________. 1) the company is allowed to sell 2) repurchased 3) sold less repurchased 4) sold

4) sold

Justin Corp. issues 10,000 shares of $1 par value common stock for $5 per share. The journal entry to record this transaction will include which of the following? (Check all that apply.)

Credit to Additional paid-in capital $40,000; Credit to Common stock $10,000

When a company repurchases its own securities, the stock is recorded in which account?

Treasury Stock

Refurbish, Inc. reissued 1,000 shares of its treasury stock for $10,000. Prior to the reissuance, the Treasury stock balance was $(12,000), which included the $8,000 cost of the 1,000 shares reissued. After recording this transaction, ______. (Check all that apply.)

Treasury stock will equal $(4,000); Additional paid-in capital will be increased by $2,000

Treasury stock represents ______. (Check all that apply.)

a contra-equity account; the amount paid for stock reacquired and currently held in treasury

Dividends payable is a(n) ________ account with a ________ balance and is initially recorded on the ________ date. (Enter one word per blank.)

liability; credit; declaration

A dividend date of record is the date on which the corporation ______.

makes no entry

A current dividend preference requires that ______.

preferred dividends must be paid before any dividends are paid to common stockholders

Vests, Inc. has 1,000 shares of 5%, par $100, non-cumulative preferred stock and 10,000 shares of $1 par value common stock outstanding. Vests declared a $12,500 dividend. How much of the dividend is allocated to the preferred and common shares? (Check all that apply.)

$7,500 is allocated to the common stock; $5,000 is allocated to the preferred stock

Items such as unrealized gains and losses from pensions, foreign currencies or financial investments are reported as _____________. 1) accumulated other comprehensive income 2) contributed capital 3) financing activities 4) treasury stock

1) accumulated other comprehensive income

Common stock 's par value is ___________. 1) an insignificant amount specified in the corporate charter 2) the same as the common stock's average price 3) the common stock's average price 4) the same as a bond's par value

1) an insignificant amount specified in the corporate charter

Sources of financing for corporations include ____________. (check all that apply) 1) borrowing 2) issuing stock 3) fixed asset retirements 4) collecting accounts receivable

1) borrowing 2) issuing stock

A stock dividend ____________. 1) provides no economic value for current stockholders 2) causes total stockholders' equity to increase 3) increases each stockholders' percentage ownership 4) causes total stockholders' equity to decrease

1) provides no economic value for current stockholders

Which type of investment would retirees wanting a stable income prefer? 1) interest investment 2) income investment 3) stock split investment 4) growth investment

2) income investment

Transactions between a company and its stockholders affect the company's __________only. 1) income statement 2) liability balance 3) balance sheet 4) asset

3) balance sheet

The account used to record the difference between the cash received and the cost of treasury stock reissued is ______.

additional paid-in capital

The laws governing corporations ______.

allow a company to be incorporated in a different state from the one in which it operates

Treasure This, Inc. had total assets of $100,000, liabilities of $60,000 and stockholders' equity of $40,000 before repurchasing 1,000 shares of its $1 par value common stock for $5 each. After this repurchase, total assets equal _____, liabilities equal ______ and stockholders' equity equals ______.

$95,000; $60,000; $35,000

The risk from financial leverage ____________. (check all that apply) 1) decreases when a company issues new shares of stock 2) increases when a company's current ratio increases 3) increase when a company reduces its borrowing 4) increases when the cost of borrowing is greater than the return

1) decreases when a company issues new shares of stock 4) increases when the cost of borrowing is greater than the return

The journal entry to record a large stock dividend includes a debit to retained earnings and a credit to ____________. 1) additional paid-in capital 2) common stock 3) cash 4) retained earnings

2) common stock

The effect of Moe Stooge's investment in a partnership will cause ___________. (check all that apply) 1) M. Stooge, drawings to increase 2) the partnership's assets to increase 3) M. Stooge, capital to increase 4) total owner's equity to increase

2) the partnership's assets to increase 3) M. Stooge, capital to increase 4) total owner's equity to increase

When a shareholder of limited, Inc. sells its shares to another investor on the stock exchange, Limited, Inc.'s accounting equation __________. 1) will show an increase in total assets and total stockholders' equity 2) is not affected because of the cost principle 3) is not affected because the corporation is separate from its owners 4) will show a decrease in total assets and total stockholders' equity

3) is not affected because the corporation is separate from its owners

Preferred stock is advantageous in that it _____________. (check all that apply) 1) has priority over common stock when dividends are declared 2) receives dividends before creditors are to receive any interest payments 3) has priority over creditors at liquidation 4) has priority over common sock at liquidation

1) has priority over common stock when dividends are declared 4) has priority over common sock at liquidation

Treasury stock __________. (check all that apply) 1) is a contra-equity account 2) is the number of shares authorized minus the number of shares issued 3) is shares of stock no longer outstanding 4) reduces total stockholders' equity

1) is a contra-equity account 3) is shares of stock no longer outstanding 4) reduces total stockholders' equity

Preferred stock _____________. (check all that apply) 1) is useful for raising capital without reducing common stockholders' control 2) must be issued before any common stock is issued 3) has preference as to dividends

1) is useful for raising capital without reducing common stockholders' control 3) has preference as to dividends

The number of shares outstanding equals the number of shares ___________. 1) issued minus the number of shares in treasury 2) issued plus the number of shares in treasury 3) authorized plus the number of shares issued 4) authorized minus the number of shares issued

1) issued minus the number of shares in treasury

The statement of partners' capital is similar to sole proprietorships' and corporations' statements in that all report the amount _____________. (check all that apply) 1) owner(s) have invested in the business 2) of salary earned during the period 3) owner(s) have withdrawn during the period 4) earned during the period 5) of interest earned during the period

1) owner(s) have invested in the business 3) owner(s) have withdrawn during the period 4) earned during the period

A corporation may be restricted from paying a dividend if ___________. (check all that apply) 1) the dividend is greater than the amount of retained earnings 2) a creditor's loan agreement is violated 3) the shares outstanding are greater than the number of shares issued 4) the treasury stock balance is above mandated levels

1) the dividend is greater than the amount of retained earnings 2) a creditor's loan agreement is violated

What are the benefits of common stock? (check all that apply) 1) voting rights 2) a residual claim on assets after creditors and preferred stockholders have been satisfied 3) the right to receive dividends if they are declared 4) veto rights over day-to-day corporate decisions 5) a preemptive right o buy newly-issued stock before it is offered to others

1) voting rights 2) a residual claim on assets after creditors and preferred stockholders have been satisfied 3) the right to receive dividends if they are declared 5) a preemptive right o buy newly-issued stock before it is offered to others

An increase to rich's farm's account called Barry Rich, capital would occur when __________. 1) rich's farm issues common stock to barry rich 2) barry rich invests cash in rich farm 3) barry rich receives cash from rich's farm 4) rich's farm pays barry rich a dividend

2) barry rich invests cash in rich farm

advantages of debt financing over equity financing are that ____________. (check all that apply) 1) repayment of debt principal is optional 2) control is not diluted 3) more money is available 4) interest payments on debt, are tax deductible

2) control is not diluted 4) interest payments on debt, are tax deductible

The closing entry required at year end, include a ___________. (check all that apply) 1) credit to retained earnings 2) credit dividends 3) debit to retained earnings 4) debit to retained earnings

2) credit dividends 3) debit to retained earnings

A cash dividend differs from a 2-for-1 stock split in that a cash dividend ___________. (check all that apply) 1) decreases the par value per share 2) decreases retained earnings 3) increases the number of shares outstanding 4) decreases current assets

2) decreases retained earnings 4) decreases current assets

Shares outstanding equals shares ____________ minus ___________ shares. 1) authorized; issued 2) issued; treasury 3) authorized; treasury

2) issued; treasury

Treasury stock is reported in the ____________. 1) liability section of the balance sheet 2) stockholders' equity section of the balance sheet 3) operating section of the income statement 4) contra-asset section of the balance sheet

2) stockholders' equity section of the balance sheet

Contributed capital of $1,000,000 represents __________. 1) accumulated earnings minus accumulated dividends 2) the amount stockholders have invested in exchange for stock 3) donations received from creditors 4) the accumulated profits earned on stockholders' investment

2) the amount stockholders have invested in exchange for stock

The effect of the entry to close the drawing account causes __________. (check all that apply) 1) the retained earnings account to decrease 2) total owner's equity to remain unchanged 3) the drawing account to have a $0 balance 4) the capital account to decrease

2) total owner's equity to remain unchanged 3) the drawing account to have a $0 balance 4) the capital account to decrease

A corporation's board of directors could prefer a stock split to a stock dividend because a stock split _________. 1) reduces retained earnings, so the company pays less taxes 2) increases total stockholders' equity and allows the corporation more flexibility 3) does not reduce retained earnings, so it does not reduce the ability to declare a cash dividend in the future 4) increases the market price of the stock

3) does not reduce retained earnings, so it does not reduce the ability to declare a cash dividend in the future

A corporation's board of directors could prefer a stock split to a stock dividend because a stock split ____________. 1) increases the market price of the stock 2) reduces retained earnings, so the company pays less taxes 3) does not reduce retained earnings, so it does not reduce the ability to declare a cash dividend in the future 4) increases total stockholders' equity and allows the corporation more flexibility

3) does not reduce retained earnings, so it does not reduce the ability to declare a cash dividend in the future

An increase in EPS is an indicator of ___________. 1) lower financial leverage 2) lower return on equity 3) higher profitability 4) lower profitability

3) higher profitability

Which of the following reports net income relative to average common stockholders' equity in dollars? 1) EPS 2) ROA 3) P/E ratio 4) ROE

4) ROE

The P/E ratio is calculated by ____________. 1) dividing EPS by the stock price 2) dividing stockholders' equity by net income 3) dividing net income by average stockholders' equity 4) dividing the stock price by EPS

4) dividing the stock price by EPS

Earnings per share (EPS) appears on the __________. 1) income statement 2) balance sheet 3) statement of stockholders' equity

1) income statement

The term "capitalizing retained earnings" refers to _________. 1) transferring from retained earnings to common stock the amount of a stock dividend 2) the issuance of common stock at a price in excess of par value 3) the recording of all costs to get an asset in place and ready for its intended use

1) transferring from retained earnings to common stock the amount of a stock dividend

The laws governing corporations ________________. 1) vary from state to state 2) are the same for all corporations around the world 3) are the same for all corporations in the united states

1) vary from state to state

Atomic, Inc. had 10,000 shares of $1 par value common stock outstanding prior to a 2-for-1 stock split. As a result of the stock split ______. (Check all that apply.)

20,000 shares are outstanding with a $0.50 par value

Which of these is a separate legal entity? 1) partnership 2) sole proprietorship 3) corporation

3) corporation

Cumulative preferred stock is entitled to receive current dividends plus "dividends in ________ before any future common dividends can be paid. (Enter one word per blank.)

arrears

The purpose of the statement of stockholders' equity is to ______.

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

Wok N Roll, Inc. began on January 1, 2017 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of $100 par value, 5%, cumulative preferred stock. No dividends were declared in 2017 or 2018. In 2019, Wok N Roll declared and paid a $0.50 dividend to its common stockholders. Assuming all shares originally issued are outstanding, the total dividend declared and paid in 2019 equals ______.

$65,000

When does a corporation record an increase in dividends payable? 1) on the date of payment 2) on the declaration date 3) on the date of record 4) on the date of issuance

2) on the declaration date

A current dividend preference requires that ___________. 1) preferred dividends be paid before paying any interest to creditors 2) the preferred stockholders who have held the shares longest must be paid before those who more recently acquired preferred stock 3) preferred dividends must be paid before any dividends are paid to common stockholders

3) preferred dividends must be paid before any dividends are paid to common stockholders

Which of the following would be found on a statement of stockholders' equity? (check all that apply) 1) dividends 2) treasury stock 3) net income 4) additional paid-in capital 5) dividends payable 6) stock issuances

1) dividends 2) treasury stock 3) net income 4) additional paid-in capital 6) stock issuances

Dew Drop Inc. has a current ratio of 0.9 to 1.0 and $4 of debt for every $1 of equity. If Dew Drop Inn needs additional financing, it would best improve its financial situation with ________. 1) equity financing 2) the payment of a stock dividend deb financing 3) debt financing 4) the purchase of treasury stock

1) equity financing

Advantages of equality financing over debt financing include that _____________. (check all that apply) 1) equity financing does not require repayment 2) dividends are tax deductible 3) stockholders' control will increase 4) dividends are optional

1) equity financing does not require repayment 4) dividends are optional

The number of shares outstanding equals the number of shares _____________. 1) issued minus the number of shares in treasury 2) authorized minus the number of shares issued 3) issued plus the number of shares in treasury 4) authorized plus the number of shares issued

1) issued minus the number of shares in treasury

Before the board of directors declares a cash dividend, it should consider whether ____________. (check all that apply) 1) there are sufficient retained earnings 2) there is sufficient cash 3) the current liabilities are too low 4) there are enough shares authorized

1) there are sufficient retained earnings 2) there is sufficient cash

The date of record is the date on which the corporation ____________. 1) records its obligation to pay a dividend 2) finalizes its list of stockholders who will receive dividends 3) makes a payment to the stockholders of record

2) finalizes its list of stockholders who will receive dividends

Common stock's par value ____________. (check all that apply) 1) equals the amount of cash contributed by shareholders 2) affect how common stock is recorded 3) has become less meaningful because states use other means to prevent stockholders from removing capital from financially distressed companies 4) was introduced to prevent bankrupt companies from unfairly distributing company resources

2) affect how common stock is recorded 3) has become less meaningful because states use other means to prevent stockholders from removing capital from financially distressed companies 4) was introduced to prevent bankrupt companies from unfairly distributing company resources

Miss Hap, the bookkeeper for the sole proprietorship buy & large, forgot to close the drawing account at the end of the end of the accounting period, as a result, __________. 1) net income will be overstated 2) net income will be unaffected 3) net income will be understated

2) net income will be unaffected

Corporation can raise large amounts of money because _____________. 1) investing in the stock market is the surest way to get rich quick 2) shares of stock can be purchased in small amounts, so even small investors can participate 3) investors always prefer to invest in stock so they can receive dividends 4) stocks are always a good investment

2) shares of stock can be purchased in small amounts, so even small investors can participate

Dilution Solutions, Inc. repurchased 500 shares of its $2 par value common stock for $10,000. The effect of this transaction on the accounting equation, using the cost method, includes a ______. (Check all that apply.)

$10,000 increase in Treasury Stock; $10,000 decrease in Cash

The entry to record the owner's withdrawal of cash from a sole proprietorship for personal use includes ___________. (check all that apply) 1) credit to cash 2) debit to drawings 3) credit to drawings 4) debit to cash

1) credit to cash 2) debit to drawings

A corporation ____________ have a legal obligation to pay dividends. 1) does not 2) does

1) does not

Dilution Solutions, Inc. repurchased 1,000 shares of its $1 par value common stock for $5,000. The journal entry to record this transaction includes a $5,000 ________ to Treasury Stock. (Enter one word per blank.)

debit

A(n) IPO stands for ________ ________ offering. (Enter one word per blank.)

initial; public

Stock options ______. (Check all that apply.)

provide the holder with the option to purchase stock at a specified price during a specified period of time; are often given to employees as part of their compensation

Investors earn a return on stock investments by ______. (Check all that apply.)

selling the stock for more than its cost; receiving dividends

The number of shares issued represents the number of shares ______.

sold

At what governmental level are corporate charters issued?

state

The creation and oversight of all corporations are regulated by ______.

state laws

Diva, Inc. declared and paid $10,000 of dividends. Dividends of $10,000 may be found on the ______.

statement of stockholders' equity (retained earnings)

Which of the following receive dividends if declared?

stockholders

________ have ultimate authority in a corporation and elect the members of the board of directors. (Enter one word per blank.)

stockholders

The statement of stockholders' equity reports ______.

the changes in each shareholder equity account

Atomic, Inc. had 100,000 shares authorized, and 10,000 shares issued and outstanding of its $2 par value common stock. At December 31, Common Stock equaled $20,000 and total stockholders' equity equaled $100,000 prior to a 2-for-1 stock split. As a result of a 2-for-1 stock split, ______. (Check all that apply.)

the number of shares outstanding equals 20,000; the Common Stock equals $20,000; par value equals $1; stockholders' equity equals $100,000

An IPO ____________. (check all that apply) 1) stands for independent public obligations 2) stands for initial public offering 3) is when a private company goes public 4) stands for issued private options

2) stands for initial public offering 3) is when a private company goes public

True or false: When a stockholder sells its stock in Optimeyes, Inc. to another investor on a secondary stock exchange at a price higher than originally paid, the stockholders' equity section of Optimeyes increases.

False

When does a corporation record an increase in Dividends Payable?

On the declaration date

Stockable, Inc. began business on January 1, 2018 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of 6%, noncumulative, $100 par value preferred stock. No dividends were declared in 2018. In 2019, Stockable declared and paid a $0.50 dividend to its common stockholders. Which of the following istrue?

Stockable, Inc. has no legal obligation to pay a dividend to preferred stockholders in 2018.

Cumulative preferred sock is entitled to receive current dividends plus "dividends in ___________ " before any future common dividends can be paid.

arrears

The journal entry to record reissuing treasury stock at a price below the cost of the treasury stock includes a ______. (Check all that apply.)

debit to Additional paid-in capital; credit to Treasury stock; debit to Cash

The journal entry to record the declaration of a dividend that is to be paid at a later date includes a ______. (Check all that apply.)

debit to Retained Earnings; credit to Dividends Payable