Chapter 14 Accounting II

True

A correction in income of a prior period involves either a debit or credit to the Retained Earnings account.

True

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

True

Dividends may be declared and paid in cash or stock

False

Prior period adjustments to income are reported in the current year's income statement.

False

Retained earnings represents the amount of cash available for dividends.

is the same under IFRS and GAAP

The basic accounting for cash dividends and stock dividends:

True

A 10% stock dividend will increase the number of shares outstanding but the par value per share will stay the same

False

A 3-for-1 common stock split will increase total stockholders' equity but reduce the par or stated value per share of common stock

Nov 1. Debit: Cash Dividends Credit: Dividends Payable Dec 31. Debit: Dividends Payable Credit: Cash

Greenwood Corporation has 88,330 shares of common stock outstanding. It declares a $2 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31.

False

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.