Accounting last test
The statement of cash flows
along with the balance sheet is used to analyze liquidity.
A liability for dividends is created
at the date of declaration.
Dali Company has 15,000 shares of stock authorized at January 1. Dali issues 4,500 shares to the stockholders during the year and then the company repurchases 1,500 shares as treasury stock. Based on this information, how many shares are outstanding at December 31?
b. 18,000
Venture Enterprises' accountant determined the following: Common stock, $0.01 par value $50,000 Where would this item be reported on Venture's financial statements?
In the Stockholders Equity section of the balance sheet
When a company purchases treasury stock, which of the following statements is true?
The cost of the treasury stock reduces stockholders equity.
What is the effect of a stock dividend on stockholders equity?
It stays the same
When a company declares a cash dividend, which of the following is true?
Liabilities are increased.
When a company wishes to purchase and retire its own stock, the company must
decrease the stock account balances by the original issue price.
A company would repurchase its own stock for all of the following reasons except
it wishes to make an investment in its own stock.
Cash flows from acquiring and selling products are classified as
Operating activites
With regard to preferred stock,
its stockholders may have the right to participate, along with common stockholders, if an extra dividend is declared.
Which of the following is not an operating activity?
Cash payments for dividends to stockholders.
Cuero Co. reported a net loss of $30,000 for 2015, yet its cash balance increased during the year. Which financial statement should Cuero's management refer to for an explanation of this situation?
Statement of Cash Flows
All of the following are reasons for a company to repurchase its previously issued stock, except:
to increase shares outstanding
Which of the following is not a current reporting requirement for a statement that reports changes in cash over a period of time?
working capital can be used as a substitute
Which of the following statements is false?
A statement of retained earnings reports the amount of cash received from operating activities and the amount of cash paid for dividends.
A company purchased machinery by issuing 2,000 shares of $3 par value common stock. Since the company is new, there is no established market price for its stock. How would the company record the transaction?
At fair market value of the machine
Museum Corporation acquired a new manufacturing building by issuing 10,000 shares of its $50 par value preferred stock with a $75 per share market price. Similar buildings have recently cost $780,000. What are the effects of this transaction on the accounting equation for Museum?
Building increases $750,000; Preferred Stock increases $500,000; Additional Paid-in Capital-- Preferred increases $250,000
Planet & Co. reported net income for the current year. Which of the following business transactions would cause cash from operating activities to be higher than the amount of net income?
Depreciation expense was recorded for the year.
Which of the following statements is false? CASH FLOW
Investments in stock are reported as a financing activity on the statement of cash flows.
Which of the following statements is true?
Investments in stock cannot be treated as cash equivalents because they are not convertible into a known amount of cash.
Which of the following is an account in stockholders equity?
Retained Earnings
When a company declares a stock dividend, which of the following occurs?
Retained earnings are reduced
Nordic Exports Inc. reported net income of $150,000 for 2015, but its cash balance decreased $40,000. Which financial statement should Nordic Exports' management refer to for an explanation of this situation?
Statement of Cash Flows
Which of the following should be considered when a company decides to declare a cash dividend on common stock?
The cash available and the retained earnings balance
Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?
The declaration of dividends reduces the amount of income taxes the corporation must pay.
Authorized stock represents the
The maximum number of shares that can be issued
`Which of the following statements is true with regard to contributed capital?
The shares in the hands of stockholders are said to be outstanding
Which of the following statements regarding the statement of cash flows is true?
The statement of cash flows analyzes the changes in consecutive balance sheets in conjunction with the income statement.
How is treasury stock shown on the balance sheet?
a decrease in stockholders equity
If a company purchases treasury stock for $6,000 and then reissues it for $5,000, the difference of $1,000 is
a decrease in stockholders equity
Arco Corporation declared a cash dividend on June 2 of $6 per common share. The company has 2,000 shares of common stock authorized, 1,000 shares issued, and 200 in the treasury. This transaction to record the declaration of the cash dividend increases
a liability.
Port, Inc. paid a cash dividend on January 2 that had been declared prior to the end of its fiscal year. This transaction to pay the dividend will
decrease Cash Dividend Payable and decrease Cash.
Tropical Co. declared a cash dividend of $30,000. This transaction includes a(n)
decrease retained earnings of 30000
The Retained Earnings account balance for a large corporation is $10,000,000. This amount represents
earnings that have not been distributed to shareholders.
Stockholders prefer to invest in preferred stock because
the dividends are paid on preferred stock before they are paid on common stock.
With regard to a corporations stock, par value is
an arbitrary amount that exists to fulfill legal requirements.
If a company issues $5 par value common stock,
$5 per share is presented in the common stock account on the balance sheet.
Watson Company has 5,000 shares of $5 par, 3% preferred stock outstanding, and 25,000 shares of $2 par common stock outstanding. The preferred stock is cumulative and no dividends have been paid for the past two years. If the company wishes to distribute $2 per share to the common stockholders, what is the total amount of dividends that must be paid in the current year?
$52,250
If Llama Company has paid out more in dividends than it has had in net income, over the lifetime of the company, then the balances in the Stockholders' Equity should show:
a negative balance in the Retained Earnings account.
