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Dividends in arrears are required to be reported in:

the notes to the financial statements.

Which of the following is not a characteristic of a corporation?

A corporation's resources are limited to their individual stockholders' resources.

Which one of the following would not be considered an advantage of the corporate form of organization?

Government regulation

When a corporation pays a previously declared cash dividend, which of the following is true?

Liabilities decrease.

If a corporation issues cumulative, participating preferred stock, which of the following is true regarding the rights of the preferred stockholders?

They have the right to receive current-year dividends and all unpaid dividends from prior years.

Under the corporate form of business organization:

ownership rights are easily transferred.

On the statement of cash flows, the cash flows from financing activities section would include:

receipts from the issuance of capital stock.

A corporation issues 1,500 shares of common stock for $32,000. The stock has a par value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for:

$15,000.

Porter Hardware, Inc. issues $2 par common stock. Which of the following is true? Answer

$2 per share is presented on the balance sheet in the common stock account.

The excess of sales price of treasury stock over its cost should be credited to:

Additional Paid-In Capital

When a corporation declares a small stock dividend, which of the following is false?

Cash decreases.

Select the type of business that is most likely to obtain large amounts of resources by issuing stock.

Corporation

On January 15, 2011, Rockney Systems, Inc. paid a cash dividend that had been declared prior to the end of its 2010 fiscal year. The entry to pay the dividends includes a debit to:

Dividends Payable and a credit to Cash.

When a corporation declares a cash dividend, which of the following is true?

Equity decreases.

When a corporation declares a stock dividend, which of the following is true?

Equity remains the same.

Par value represents the:

arbitrary amount that establishes a minimum price for the stock when it is first issued.

A disadvantage of the corporate form of business entity is:

corporations are subject to more governmental regulations.

Authorized shares represent the:

maximum number of shares of stock that a company can legally issue.

Treasury shares represent the:

number of previously issued shares that have been repurchased by the corporation.

Outstanding shares represent the:

number of shares that are currently held by stockholders.

Issued shares represent the:

number of shares that the corporation has distributed to owners to date.

Characteristics of a corporation include:

shareholders who have limited liability.

Cash dividends paid on common stock would be reported in the statement of cash flows in:

the cash flows from financing activities section.

One of the main disadvantages of the corporate form is the:

double taxation of dividends.

All of the following are reasons that a corporation may purchase treasury stock except:

if it desires to make an investment in its own stock and is reported as an asset.

On January 1, 2010, Framm Corporation issued 10,000 shares of its 10%, $20 par value cumulative preferred stock. No dividends were declared by Framm in 2010 or 2011. In 2012, Framm had a profitable year and was in a strong cash position, so it declared a dividend of $200,000. How much of this dividend was paid to Framm's common stockholders?

$140,000

On June 1, 2011, Donner Technologies declared a $50,000 cash dividend to be distributed to its common stockholders of record on June 15, 2011. The dividend will be paid on July 1, 2011. The required journal entry on June 1 includes a:

$50,000 debit to retained earnings.

When is a liability for cash dividends created?

At the date of declaration.

Murton Industries, Inc. reported the following information on its recent balance sheet. Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding Refer to the information for Murton Industries. What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share at the time the stock split is declared?

A stock split has no impact on any of the stockholders' equity account balances.

Murton Industries, Inc. reported the following information on its recent balance sheet. Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding Refer to the information for Murton Industries. What is the effect on Murton's accounting equation of issuing 1,000 additional shares of common stock at $15 per share?

Assets increase $15,000, liabilities remain unaffected, and equity increases $15,000

Which of the following is not characteristic of a corporation?

Cash dividends paid by a corporation are deductible as expenses by the corporation.

Alma Corp. issues 1,000 shares of $10 par value common stock at $16 per share. When the transaction is recorded, a credit or credits are made to:

Common Stock $10,000 and Additional Paid-in Capital $6,000.

Brumfield, Inc. issued 7,000 shares of $1 par common stock for $20 per share. In addition to the increase in cash, what effect does this transaction have on Brumfield's accounting equation?

Common stock increases $7,000 and additional paid-in capital in excess of par increases $133,000.

After a corporation declares a cash dividend, what takes place on the date of record?

No entry is necessary.

The Sneed Corporation issues 10,000 shares of $50 par value preferred stock for cash at $70 per share. The entry to record the transaction will consist of a debit to Cash for $700,000 and a credit or credits to:

Preferred Stock for $500,000 and Additional Paid-in Capital for $200,000.

Which of the following is the appropriate general journal entry to record the declaration of a cash dividends?

Retained Earnings Dividends Payable

Corporation had 60,000 of its $3 par common stock issued before its recent 3-for-1 stock split. The market price of the stock was $30 per share before the split. Which of the following is true as a result of the split?

The par value of the stock decreased to $1 per share.

Many stockholders choose to invest in preferred stock because:

dividends are distributed to preferred stockholders before common stockholders.

The ability of a corporation to obtain capital is:

enhanced because of the limited liability and the ease of share transferability.

Earnings per share is an indication of how much:

the company earned for each share of outstanding common stock.

In which of the following organization forms are the owners' legal responsibility for the debt of the business limited to the Modify Remove amount they invested in the business?

Corporation

Murton Industries, Inc. reported the following information on its recent balance sheet. Common stock, $10 par, 100,000 shares authorized, 75,000 shares issued and outstanding Refer to the information for Murton Industries. What is the effect of a 10% stock dividend if the market price of the common stock is $30 per share when the stock dividend is declared?

Retained earnings decreases by $225,000.

What is the primary reason for a stock split?

To decrease the market value of the stock.

Prady, Inc. began operations on October 1, 2011, with 3,000 shares of $2 par common stock authorized. Prady issued all of its common stock during 2011 and 2012. On December 31, 2012, Prady repurchased 1,000 shares of its outstanding shares, then reissued 500 of these shares on March 1, 2013. On June 1, 2013, Prady declared a 2-for-1 stock split. As a result of this stock split, which of the following is true?

Total stockholders' equity remained the same.

Cash paid for preferred stock dividends should be shown on the statement of cash flows under:

inancing activities.

Parnell, Inc. has 5,000 shares of $5 par, 3% cumulative preferred stock outstanding and 25,000 shares of $2 par common stock outstanding. 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

Which of the following statements is false regarding the issuance of stock versus bonds to raise capital for a corporation?

The declaration of dividends reduces the amount of the corporation's taxable income.

When a corporation decides whether to pay a cash dividend, which of the following is an important consideration?

The balances in the corporation's cash account to determine cash available for dividends.

Which of the following statements is true regarding a corporation's purchase of treasury stock?

The cost of treasury stock is a reduction in stockholders' equity.

If a corporation declares a 2-for-1 stock split, which of the following is true?

The number of outstanding shares is twice the number that was outstanding before the split. and The par value will be reduced to half of the pre-split par value.

Which of the following statements is true with regard to equity capital?

The number of shares actually in the hands of stockholders are called outstanding shares.