Chapter 10 Class Prep

Since stock dividends are paid with shares of stock instead of cash, no reduction in Retained Earnings is recorded.

False

Authorized stock represents the a. maximum number of shares that can be issued for each class of stock. b. number of shares that the corporation has sold. c. number of shares that are currently held by stockholders. d. number of previously issued shares that have been repurchased by the corporation.

A

Issued shares represent the a. number of shares that are currently held by stockholders. b. number of previously issued shares that have been repurchased by the corporation. c. number of shares that the corporation has sold. d. maximum number of shares that can be sold by the corporation.

C

Outstanding shares represent the a. number of previously issued shares that have been repurchased by the corporation. b. number of shares that the corporation has sold. c. number of shares that are currently held by stockholders. d. maximum number of shares that can be sold by the corporation.

C

Treasury shares represent the a. maximum number of shares that can be sold by the corporation. b. number of shares that are currently held by stockholders. c. number of previously issued shares that have been repurchased by the corporation. d. number of shares that the corporation has sold.

C

Both stock dividends and stock splits increase the number of a corporation's outstanding shares without altering the proportionate ownership of the corporation.

True

Comprehensive income represents the increase in net assets resulting from all transactions occurring during the accounting period EXCEPT transactions with owners.

True

In general, retained earnings represents accumulated earnings of the corporation less dividends paid.

True

Treasury stock is reported as a reduction of stockholders' equity.

True

When a corporation declares a dividend, a liability must be recorded.

True