Question 1

The cumulative effect of the declaration and payment of a cash dividend on a company's balance sheet is to

Accepted Answer

A)  decrease current liabilities and stockholders' equity.
B)  increase total assets and stockholders' equity.
C)  increase current liabilities and stockholders' equity.
D)  decrease stockholders' equity and total assets.E) C) and D)
F) None of the above

Question 2

A corporation is not committed to a legal obligation when it declares

Accepted Answer

A)  a cash dividend.
B)  either a cash dividend or a stock dividend.
C)  a stock dividend.
D)  a distribution date.E) A) and D)
F) All of the above

Question 3

Dividends are predominantly paid in

Accepted Answer

A)  earnings.
B)  property.
C)  cash.
D)  stock.E) B) and C)
F) A) and D)

Question 4

Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs.

Accepted Answer

A) True 
 B)False

Question 5

The purchase of treasury stock

Accepted Answer

A)  decreases common stock authorized.
B)  decreases common stock issued.
C)  decreases common stock outstanding.
D)  has no effect on common stock outstanding.E) A) and B)
F) All of the above

Question 6

When preferred stock is cumulative, preferred dividends not declared in a period are

Accepted Answer

A)  considered a liability.
B)  called dividends in arrears.
C)  distributions of earnings.
D)  never paid.E) C) and D)
F) A) and D)

Question 7

The following selected amounts are available for Clark Company.  What is its ending retained earnings balance?

Accepted Answer

A)  $750
B)  $800
C)  $550
D)  $700E) B) and D)
F) A) and D)

Question 8

Crawl Inc., has 1,000 shares of 6%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2014, and December 31, 2015. The board of directors declared and paid a $2,000 dividend in 2014. In 2015, $10,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2015?

Accepted Answer

A)  $6,000
B)  $5,000
C)  $4,000
D)  $3,000E) C) and D)
F) A) and D)

Question 9

The number of common shares outstanding can never be greater than the number of shares issued.

Accepted Answer

A) True 
 B)False

Question 10

Accounting for treasury stock is done by the

Accepted Answer

A)  FIFO method.
B)  LIFO method.
C)  cost method.
D)  lower of cost or market method.E) B) and C)
F) A) and D)

Question 11

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2015. No dividends have been paid on this stock for 2014 or 2015. Dividends in arrears at December 31, 2015 total

Accepted Answer

A)  $0.
B)  $500.
C)  $5,000.
D)  $10,000.E) B) and D)
F) A) and B)

Question 12

Prior period adjustments

Accepted Answer

A)  may only increase retained earnings.
B)  may only decrease retained earnings.
C)  may either increase or decrease retained earnings.
D)  do not affect retained earnings.E) None of the above
F) B) and D)

Question 13

Preferred stock has contractual preference over common stock in certain areas.

Accepted Answer

A) True 
 B)False

Question 14

Win, Inc. has 10,000 shares of 7%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2015. If the board of directors declares a $70,000 dividend, the

Accepted Answer

A)  preferred shareholders will receive 1/10th of what the common shareholders will receive.
B)  preferred shareholders will receive the entire $70,000.
C)  $70,000 will be held as restricted retained earnings and paid out at some future date.
D)  preferred shareholders will receive $35,000 and the common shareholders will receive $35,000.E) A) and B)
F) A) and C)

Question 15

A proxy is a legal document that instructs a stockholder's agent how to vote shares of stock for the stockholder.

Accepted Answer

A) True 
 B)False

Question 16

Treasury stock should be reported in the financial statements of a corporation as a(n)

Accepted Answer

A)  investment.
B)  liability.
C)  deduction from total paid-in capital.
D)  deduction from total paid-in capital and retained earnings.E) A) and D)
F) B) and D)

Question 17

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

Accepted Answer

A)  stated value of the stock.
B)  par value of the stock.
C)  market value of the stock.
D)  book value of the stock.E) A) and D)
F) B) and C)

Question 18

In the financial statements, organization costs appears

Accepted Answer

A)  immediately below Retained Earnings in the stockholders' equity section.
B)  in the income statement.
C)  as part of paid-in capital in the stockholders' equity section.
D)  as an intangible asset.E) A) and B)
F) C) and D)

Question 19

If common stock is issued for an amount greater than par value, the excess should be credited to

Accepted Answer

A)  Cash.
B)  Retained Earnings.
C)  Paid-in Capital in Excess of Par.
D)  Legal Capital.E) All of the above
F) B) and D)

Question 20

Restricting retained earnings for the cost of treasury stock purchased is a

Accepted Answer

A)  contractual restriction.
B)  legal restriction.
C)  stock restriction.
D)  voluntary restriction.E) A) and B)
F) All of the above

Exam 11: Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Dividends are predominantly paid in

Correct Answer
verified

The purchase of treasury stock

Correct Answer
verified

In the financial statements, organization costs appears

Correct Answer
verified

The number of common shares outstanding can never be greater than the number of shares issued.

Correct Answer
verified

A proxy is a legal document that instructs a stockholder's agent how to vote shares of stock for the stockholder.

Correct Answer
verified

If common stock is issued for an amount greater than par value, the excess should be credited to

Correct Answer
verified

Win, Inc. has 10,000 shares of 7%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2015. If the board of directors declares a $70,000 dividend, the

Correct Answer
verified

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

Correct Answer
verified

When preferred stock is cumulative, preferred dividends not declared in a period are

Correct Answer
verified

Preferred stock has contractual preference over common stock in certain areas.

Correct Answer
verified

The following selected amounts are available for Clark Company. What is its ending retained earnings balance?

Correct Answer
verified

Treasury stock should be reported in the financial statements of a corporation as a(n)

Correct Answer
verified

A corporation is not committed to a legal obligation when it declares

Correct Answer
verified

Prior period adjustments

Correct Answer
verified

The cumulative effect of the declaration and payment of a cash dividend on a company's balance sheet is to

Correct Answer
verified

Restricting retained earnings for the cost of treasury stock purchased is a

Correct Answer
verified

Accounting for treasury stock is done by the

Correct Answer
verified

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2015. No dividends have been paid on this stock for 2014 or 2015. Dividends in arrears at December 31, 2015 total

Correct Answer
verified

Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs.

Correct Answer
verified

Correct Answer
verified

Exam 11: Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Dividends are predominantly paid in

Correct AnswerverifiedShow Answer

The purchase of treasury stock

Correct AnswerverifiedShow Answer

In the financial statements, organization costs appears

Correct AnswerverifiedShow Answer

The number of common shares outstanding can never be greater than the number of shares issued.

Correct AnswerverifiedShow Answer

A proxy is a legal document that instructs a stockholder's agent how to vote shares of stock for the stockholder.

Correct AnswerverifiedShow Answer

If common stock is issued for an amount greater than par value, the excess should be credited to

Correct AnswerverifiedShow Answer

Win, Inc. has 10,000 shares of 7%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2015. If the board of directors declares a $70,000 dividend, the

Correct AnswerverifiedShow Answer

When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the

Correct AnswerverifiedShow Answer

When preferred stock is cumulative, preferred dividends not declared in a period are

Correct AnswerverifiedShow Answer

Preferred stock has contractual preference over common stock in certain areas.

Correct AnswerverifiedShow Answer

The following selected amounts are available for Clark Company. What is its ending retained earnings balance?

Correct AnswerverifiedShow Answer

Treasury stock should be reported in the financial statements of a corporation as a(n)

Correct AnswerverifiedShow Answer

A corporation is not committed to a legal obligation when it declares

Correct AnswerverifiedShow Answer

Prior period adjustments

Correct AnswerverifiedShow Answer

The cumulative effect of the declaration and payment of a cash dividend on a company's balance sheet is to

Correct AnswerverifiedShow Answer

Restricting retained earnings for the cost of treasury stock purchased is a

Correct AnswerverifiedShow Answer

Accounting for treasury stock is done by the

Correct AnswerverifiedShow Answer

Brown Company has 1,000 shares of 5%, $100 par cumulative preferred stock outstanding at December 31, 2015. No dividends have been paid on this stock for 2014 or 2015. Dividends in arrears at December 31, 2015 total

Correct AnswerverifiedShow Answer

Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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