Chapter 11 Learnsmart's

A stock dividend ______.

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

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.

dividend

_________ per share equals Net Income divided by the average shares of common stock ___________. (assume no preferred stock).

earnings, outstanding

The effect of repurchasing stock using the cost method is to ______.

increase Treasury Stock decrease assets decrease stockholders' equity

Treasury Stock ______.

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

Preferred stock ______.

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

Earnings per share (EPS) equals ______ divided by the average shares of common stock outstanding. (Assume no preferred stock has been issued.)

net income

_____________ reports the cumulative amount of net income earned by the company less the cumulative amount of dividends since the corporation began.

retained earnings

Which of the following would be found on a statement of stockholders' equity?

Stock Issuances Net Income Dividends Additional Paid-in Capital 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, ______.

Treasury Stock will equal $4,000 Additional Paid-in Capital will be increased by $2,000

Dividends Payable is recorded as a credit on the ______.

declaration date

The declaration and payment of a cash dividend ultimately causes a(n) ______.

decrease in stockholders' equity decrease in Retained Earnings decrease in Cash

The journal entry to record reissuing treasury stock at a price below the cost of the treasury stock includes a ______.

debit to Additional Paid-in Capital debit to Cash credit to Treasury Stock

Refurbish, Inc. bought 1,000 shares of its own stock at $8 a share. Later, it reissued the shares for $10,000. The effect of the entry to record the sale of treasury stock on the accounting equation includes a(n) ______.

$10,000 increase in stockholders' equity

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

$2,000 credit to Additional Paid-in Capital $8,000 credit to Treasury Stock

Match the date with the related event.

Declaration date: The board of directors officially approves a dividend date of record: Stock records are finalized to determine which stockholders are to receive payment payment date: Dividends payable is decreased

Which of the following line item amounts would be under the Retained Earnings column of a statement of stockholders' equity?

Dividends: Common Dividends: Preferred Net Income

When does a corporation record an increase in Dividends Payable?

On the declaration date

Select those statements below that are true about cash dividends.

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

The journal entry to record the declaration of a dividend includes ______.

a credit to Dividends Payable a debit to Dividends

Which of the following line items would be found on a statement of stockholders' equity that would not be on the statement of retained earnings?

Additional Paid-in Capital Treasury Stock Common Stock

Preferred stock carries priority over common stock ______.

both for dividends and at liquidation

Retained Earnings are ______.

decreased by dividends all of the company's earnings kept rather than distributed to stockholders increased by net income sometimes called earned capital