Financial Accounting - Learning Objective #13

On March 10, Blarney Corporation issued for cash 10,000 shares of no-par common stock at $40. The journal entry to record this transaction would include a: a) debit to cash for $10,000 b) credit to cash for $400,000 c) credit to common stock for $400,000 d) credit to common stock for $100,000

c) credit to common stock for $400,000

A corporation has a $500,000 beginning balance in Retained Earnings. Its net income for the year was $200,000. Sales revenue amounted to $1,000,000, and dividends declared and paid by year-end amounted to $100,000. What was the ending balance in Retained Earnings? a) $600,000 b) $1,400,000 c) $700,000 d) $1,200,000

a) $600,000

The __________ is the date the board of directors formally authorizes the payment of the dividend. a) declaration date b) record date c) payment date d) none of these choices are correct

a) declaration date

A debit balance in Retained Earnings is known as a: a) deficit b) surplus c) net loss d) none of these choices are correct

a) deficit

A stock dividend __________ the assets, liabilities, or total stockholders' equity of a corporation. a) does not change b) increases c) decreases d) none of these choices are correct

a) does not change

If the stock is issued for a price that is more than its par value, the stock: a) has been sold at a premium b) has been sold at a discount c) has been sold at its stated value d) is converted to no-par stock

a) has been sold at a premium

An increase in EPS from one year to the next would indicate: a) an unfavorable trend b) a favorable trend c) a neutral trend d) none of these choices are correct

b) a favorable trend

A journal entry to record the issuance of preferred stock above par would include a: a) credit to cash b) credit to paid-in capital in excess of par c) debit to preferred stock d) debit to paid-in capital in excess of par

b) credit to paid-in capital in excess of par

On the balance sheet, the balance of Treasury Stock is: a) added to stockholders' equity b) deducted from stockholders' equity c) disclosed only in the notes d) not reported

b) deducted from stockholders' equity

All of the following are considered advantages of the corporate form of business except: a) limited liability b) double taxation c) continuous life d) none of these choices are correct

b) double taxation

A $20 par value stock in a 2:1 stock split will yield a new par value of: a) $40 b) $30 c) $10 d) no change

c) $10

The declaration date journal entry for a cash dividend would include: a) a debit to cash b) a credit to cash c) a credit to cash dividends payable d) none of these choices are correct as no entry is needed on this date

c) a credit to cash dividends payable

On February 10, the corporation purchases back 2,000 shares of its own common stock for $50 per share. The entry to record the purchase would include a: a) debit to cash for $100,000 b) credit to treasury stock for $100,000 c) debit to treasury stock for $100,000 d) debit to common stock for $100,000

c) debit to treasury stock for $100,000

EPS is calculated as: a) net income divided by the number of shares outstanding b) revenue divided by number of shares issued and outstanding c) net income less preferred dividends divided by average number of common shares outstanding during the period d) none of these choices are correct

c) net income less preferred dividends by average number of common shares outstanding during the period

A corporation may reacquire (purchase) its own stock for which of the following reasons? a) to provide shares for resale to employees b) to reissue as bonuses to employees c) to support the market price of the stock d) all of these choices are correct

d) all of these choices are correct

Restrictions of retained earnings may be classified as: a) legal b) contractual c) discretionary d) all of these choices are correct

d) all of these choices are correct

__________ are distributions of a corporation's earnings to stockholders. a) profits b) revenues c) stocks d) dividends

d) dividends

The ultimate authority of a corporation belongs to the: a) CEO b) board of directors c) CFO d) none of these choices are correct

d) none of these choices are correct