Accounting Chapter 10
Double taxation means that the:
corporation pays taxes on its earnings and the shareholders pay taxes on the dividends received from the corporation.
Which one of the following is NOT a stockholder's right of ownership in a corporation?
the right to decide if a dividend should be distributed
Stockholders of a corporation directly elect the:
Board of directors.
The chairperson of the board of directors often has the title of:
Chief Executive Officer (CEO).
A company buys treasury stock for $10 per share. The company later sells the treasury stock for $11 per share. What is the difference between the resale price and the cost of the treasury stock called?
Gain on Sale of Treasury Stock // Paidminus−in Capital in Excess of Par // Paidminus−in Capital from Treasury Stock Transactions
When a company issues common stock at a price per share greater than its par value per share, the excess should be credited to:
Paid−in Capital in Excess of Par—Common.
Regarding the retained earnings account, which of the following statements is INCORRECT?
Stock dividends decrease retained earnings. // Net income is the only item that increases retained earnings. // Other adjustments to retained earnings are usually relatively minor and relatively rare.
The basic form of capital stock is:
a share of common stock.
The issuance of common stock in exchange for cash will be reported in:
the financing activities section of the statement of cash flows.
The purchase of treasury stock returns ________ to the stockholders but also ________.
cash; decreases their ownership of the company.
Treasury stock has a:
debit balance, the opposite of other stockholders' equity accounts.
The date on which a cash dividend becomes a legal obligation is the:
declaration date.
Which of the following is NOT considered to be an advantage of forming a corporation?
government regulation
A stock split
has no effect on total stockholders' equity.
When 100 shares of $1 par value Common Stock are issued at $30 per share, Paid−in Capital in Excess of Par—Common will:
increase $2900
How does the declaration of a cash dividend affect the accounting equation?
increase to liabilities and a decrease to stockholders' equity
Reasons that a company would purchase treasury stock include all of the following EXCEPT:
management wants to decrease earnings per share of common stock.
The purchase of treasury stock is reported on the statement of cash flows as a:
negative amount in the financing activities section.
Treasury stock accounts for the difference between the number of:
outstanding shares and issued shares.
Corporations may choose to distribute stock dividends in order to:
reduce the per−share market price of its stock and continue dividends but conserve cash
Stockholders' equity is divided into
retained earnings and paid−in capital.
The arbitrary amount assigned by a company to a share of its stock is the:
stated value per share and par value per share
An increase in the number of issued and outstanding shares of stock along with a proportional reduction in the stock's par value per share is a:
stock split
Mr. Jorgensen, a shareholder in the Best Corporation, owns 9,000 shares of its common stock. Mr. Jorgensen receives a 6% stock dividend. After the stock dividend, Mr. Jorgensen will have a:
total of 9,540 shares of Best Corporation's common stock.
Previously issued stock that a corporation purchases from shareholders is called:
treasury stock.