acct sb ch 8

Which of the following is not normally included in the articles of incorporation?

A forecast of projected profitability

Which of the following statements are true?

All corporations have common stock. Common stockholders have the right to buy and sell stock.

Which financial statement is affected on both the date of declaration and the payment date of a dividend?

Balance Sheet

Base Line Incorporated is authorized to issue 50,000 shares of $15 par value common stock. On January 1, Year 1, Base Line issued 10,000 shares of the stock for $24 per share. Which financial statements were affected by the stock issue?

Balance sheet Statement of cash flows

Which of the following statements is true?

Corporations are not legally required to declare cash dividends.

Which of the following statements are true?

If a company skips a dividend on noncumulative preferred stock, the dividend is lost forever. Preferred stock dividends in arrears must be paid before dividends can be distributed to common stockholders.

Which of the following statements are true?

Owner withdrawals are shown in the capital statement of a proprietorship. The balance sheet of a proprietorship contains a single Owner's Capital account.

True or false: The financial statement effects of issuing stated value stock are identical to the financial statement effects of issue par value stock.

True

Treasury stock is ______ on the balance sheet.

a contra equity

A corporation becomes legally obligated to make a cash dividend on the__________ date

declaration

Preferred stock ____

dividends are paid before dividends are distributed to common stockholders has a liquidation value that, in case of bankruptcy, is paid before assets are distributed to common stockholders

Which financial statements are NOT affected by the declaration of a dividend?

statement of cash flows income statement

Common stockholders have the right to ______.

vote on significant matters that affect the corporate charter participate in the election of directors share in the distribution of profits

Distributions to owners of proprietorships are called

withdrawls

Base Line Incorporated is authorized to issue 50,000 shares of $15 par value common stock. On January 1, Year 1, Base Line issued 10,000 shares of the stock for $24 per share. Immediately after the issue, Base Line's balance sheet will show ______ of paid-in-capital in excess of par value.

$90,000 Reason: $24 issue price - $15 par value = $9 in excess of par × 10,000 shares = $90,000.

Match the account title shown in the right column with the order in which they are presented in the stockholders' equity section of a balance sheet. Use the number 1 to represent the account title shown first, the number 2 to represent the second title, and so on.

1 Par Value Preferred Stock 2 Stated Value Common Stock 3 Class B Common Stock 4 Paid-in Capital in Excess of Par Value Preferred Stock 5 Paid-in Capital in Excess of Stated Value Common Stock 6 Retained Earnings

Which of the following statements are true?

A proprietorship is the simplest form of business organization to organize and operate. The requirements for establishing a corporation vary from state to state.

Cumulative dividends ______.

are dividends that accumulate for future payment when a company fails to pay a periodic dividend ` may also be called dividends in arrears

The greatest potential for rewards when a corporation prospers rests with ______ stockholders.

common

Paying a previously declared cash dividend ______.

decreases both liabilities and assets

When a company issues no-par common stock, the ______.

entire amount of the proceeds is placed into the Common Stock account. cash inflow is classified as a financing activity

Preferred stock ______.

has a liquidation value that, in case of bankruptcy, is paid before assets are distributed to common stockholders dividends are paid before dividends are distributed to common stockholders

The date of record for a cash dividend ______.

has no effect on the financial statements

The issue of no-par common stock does not affect the ______.

income statement

Declaring a cash dividend ____

increases liabilities and decreases stockholders' equity

Declaring a cash dividend ______.

increases liabilities and decreases stockholders' equity

When a corporation buys treasury stock, the __

number of shares of stock outstanding decreases number of shares of stock authorized is not affected

Corporations normally list_________ stock before _________ stock in the stockholders' section of the balance sheet.

preferred common

The party that owns the stock on the date of ______ is legally entitled to a cash dividend.

record

Base Line Incorporated is authorized to issue 50,000 shares of $15 par value common stock. On January 1, Year 1, Base Line issued 10,000 shares of the stock for $24 per share. As a result of the stock issue, ______.

the income statement was not affected total assets increased by $240,000

When a corporation purchases its own stock, the stock purchased is called _______ stock.

treasury

When a corporation purchases its own stock, the stock purchased is called______ stock

treasury