Mopdule 3 - Ch 18 SB

The term treasury stock refers to

stock that is repurchased and not retired.

Which of the following are characteristics of treasury stock? (Select all that apply.)

-It does not receive a dividend. -It is stock that is repurchased by the company. -It has no voting rights.

1. Declaration date 2. Record date 3. ex-dividend date 4. payment date

1. Date that the corporate board of directors announces a dividend 2. Date that a determination is made as to recipients of a dividend 3. Date before which investors must purchase stock in order to receive a dividend 4. Date that corporate assets are transferred to shareholders

Which of the following are included in the rights of common stockholders?

Right to vote on certain matters

When does a dividend become a liability to a corporation?

When it is declared by the board of directors

The date on which a company determines the registered owners of the stock who will receive a dividend is referred to as the

record date.

A company that repurchases its own securities accounts for the shares of stock as

retired shares or treasury shares.

Which of the following accurately describes shareholders' equity?

Ownership interests of the shareholders

When a company repurchases its own shares of stock, what are the two acceptable accounting choices for the transaction?

-The shares can be formally retired. -The shares can be called treasury shares.

Which of the following accounts are classified as shareholders' equity?

-additional paid-in capital -common stock -retained earnings

A property dividend (Select all that apply.)

-is a noncash distribution to owners. -reduces retained earnings.

When a corporation distributes assets of the company to its investors, it is referred to as a(n)

dividend

A nonreciprocal transfer to owners is referred to as a Multiple choice question.

property dividend.

Fantastic Gold Inc. declares and distributes to its shareholders 1 gram of gold in lieu of a cash dividend. Fantastic Gold is distributing a(n)

property dividend.

A preemptive right is the right to

purchase additional shares of stock in proportion to the current percentage of ownership.

The date on which a company determines the registered owners of the stock who will receive a dividend is referred to as the

record date

Shares of stock previously sold by the corporation that are repurchased are called Multiple choice question.

treasury stock.

Which type of stock usually has a high par value and a percentage of par value dividend rate?

Preferred stock

When a corporation repurchases its stock as treasury stock, the number of shares outstanding

decreases

Retained earnings is typically reported on the balance sheet

as a single amount.

A corporation's accumulated income that has not been distributed as dividends to shareholders is referred to as

retained earnings

Net assets equals

shareholders' equity.

When common stock has a designated par value, and common stock is issued at an amount above par, which entry is recorded?

Credit common stock for the par amount.

Which feature of preferred stock requires that, when a dividend is declared, all previous undeclared dividends must be paid on preferred stock?

Cumulative

Mars Inc. issues 5,000 shares of no par stock for $100,000. Which of the following entries are required? (Select all that apply.)

- debit cash - credit common stock

Which of the following accounts are classified as shareholders' equity?

-Net unrealized holding gains on investments -Additional paid-in capital -Preferred stock

The rights of common stockholders typically include which of the following? (Select all that apply.)

-Right to distribution of assets in liquidation. -Right to vote for corporate directors. -Right to dividends when declared.

Justin Corp. issues 10,000 shares of $1 par value common stock for $5 per share. The journal entry to record this transaction will include which of the following? (Select all that apply.)

-credit to additional paid-in capital $40,000 -credit to common stock $10,000

Preferred stockholders usually have preference over common stockholders with respect to which items? (Select all that apply.)

-dividends -distribution of assets in liquidation

1. cumulative 2. noncumulative

1. Dividends, if not declared, accumulate and must be paid in the future when a dividend is declared. 2. Dividends are paid in the current year only if declared.

Which of the following transactions are classified as a stock dividend?

A distribution of additional shares of a corporation's stock to current shareholders of the corporation.

Which account is a stockholders' equity account?

Additional paid-in capital

True or false: When investors purchase shares of stock from a corporation, it is recorded by the corporation as investments in securities.

False (Reason: When investors purchase shares of stock in a corporation, the corporation records the transaction as paid-in capital.)

When a corporation issues two securities for a single price, how is the issue price usually allocated?

The cash received is allocated based on the relative market value of each security.

If a corporation issues its shares of stock for a noncash asset, at what amount should the transaction be recorded?

The fair value of the stock

A frequent reason for a stock split is to

cause the market price per share to decline.

The date on which the board of directors announces that a dividend will be paid is referred to as the

declaration date