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| 1.
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Which is the order in which the dates related to cash dividends occur? |
| | A) | declaration, record, payment |
| | B) | payment, declaration, record |
| | C) | payment, record, declaration |
| | D) | record, declaration, payment |
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| 2.
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The Common Stock Dividend Distributable account is classified as a/an: |
| | A) | current liability account |
| | B) | shareholders' equity account |
| | C) | long-term liability account |
| | D) | intangible asset account |
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| 3.
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Which of the following is true about the effects of a stock dividend? |
| | A) | Shareholders' Equity: Decreases, Retained Earnings: No Change |
| | B) | Shareholders' Equity: Decreases, Retained Earnings: Decreases |
| | C) | Shareholders' Equity: No Change, Retained Earnings: Decreases |
| | D) | Shareholders' Equity: No Change, Retained Earnings: No Change |
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| 4.
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A stock split will |
| | A) | increase the number of shares outstanding |
| | B) | decrease the amount of contributed capital |
| | C) | increase the amount of contributed capital |
| | D) | decrease retained earnings |
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| 5.
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Which of the following is not a reason for a corporation to acquire its own shares of stock? |
| | A) | To use them as compensation to employees. |
| | B) | To avoid a hostile takeover by investors seeking control. |
| | C) | To help shareholders get a better price for outstanding shares. |
| | D) | To increase the assets of the corporation. |
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| 6.
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Which of the following accounts would not be classified as a contributed capital account? |
| | A) | Contributed Capital, Common Shares |
| | B) | Treasury Shares, Common |
| | C) | Stock Dividends Distributable |
| | D) | Contributed Capital, Preferred Shares |
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| 7.
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Which of the following is true? |
| | A) | Treasury shares receive cash dividends. |
| | B) | Treasury shares must be sold for more than its cost. |
| | C) | Treasury shares are unissued shares of the corporation. |
| | D) | The purchase of treasury shares reduces shareholders' equity. |
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| 8.
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Jute Enterprises issues 10,000 shares of common stock on January 1, 2002 at $12 per share. On June 30, 2002, a 10% stock dividend is declared. The market value of the stock on this date is $15. The journal entry to record the stock dividend declared would include a: |
| | A) | debit to retained earnings for $120,000 |
| | B) | debit to retained earnings for $12,000 |
| | C) | debit to retained earnings for $150,000 |
| | D) | debit to retained earnings for $15,000 |
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| 9.
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Which of the following events might be considered as extraordinary? |
| | A) | Gains and losses from retiring debt. |
| | B) | Gains or losses from exchanging foreign currencies. |
| | C) | Gains or losses from disposing of a business segment. |
| | D) | Effects of a labour action against a major supplier of materials. |
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| 10.
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Company A has a simple capital structure of 100,000 shares of $10 par common shares, no preferred shares, and retained earnings of $750,000. The company made no sales or purchases of its common shares. The earnings per share was $.75. What was the amount of net income? |
| | A) | $750,000 |
| | B) | $75,000 |
| | C) | $100,000 |
| | D) | $50,000 |
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| 11.
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Net income for the period totaled $55,000, preferred dividends paid totaled $10,000, and common dividends paid totaled $30,000. If there were 100,000 common shares outstanding throughout the year, what was the earnings per common share? |
| | A) | $4.50 |
| | B) | $44.50 |
| | C) | $.45 |
| | D) | $.30 |
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| 12.
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From January 1 to May 31, Company A had 7,000 shares outstanding. From June 1 to October 31, the company had 8,000 shares outstanding. From November 1 to December 31, the company had 7,500 shares outstanding. What is the denominator for determining the earnings per share for this simple capital structure company? |
| | A) | 7,500 shares |
| | B) | 7,000 shares |
| | C) | 7,459 shares |
| | D) | 8,042 shares |
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| 13.
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From January 1 to May 31, Company A had 4,800 shares outstanding. From June 1 to October 31, the company had 5,220 shares outstanding. From November 1 to December 31, the company had 6,000 shares outstanding. If the company had declared a two-for-one stock split on December 1, how many shares are outstanding after the stock split? |
| | A) | 3,000 |
| | B) | 6,000 |
| | C) | 12,000 |
| | D) | 32,040 |
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| 14.
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Which of the following is NOT true with regard to appropriations of retained earnings? |
| | A) | They will restrict the amount of possible cash dividends. |
| | B) | They may be required because of contractual obligations. |
| | C) | They may be made at the discretion of the board of directors. |
| | D) | They require setting aside a reserve of cash for the appropriations. |
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| 15.
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Which of the following is not a reason for a corporation to declare share dividends? |
| | A) | to conserve cash for business expansion. |
| | B) | to provide evidence of management’s confidence that the company is doing well. |
| | C) | to keep the market price of the shares affordable. |
| | D) | to increase share price. |
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| 16.
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Which of the following statement is correct? |
| | A) | A share split involves a journal entry to record the increase in number of shares issued and outstanding. |
| | B) | A share dividend does not involve a journal entry and simply increases the number of shares issued and outstanding. |
| | C) | A share dividend increases the number of shares issued and outstanding and requires a journal entry to record the event. |
| | D) | None of the above. |
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| 17.
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Which of the following item should be reported in the continuing operations section of an Income Statement? |
| | A) | A loss on disposal of Division X. |
| | B) | A gain on the sale of land expropriation by government. |
| | C) | A loss from damages to plant caused by an ice storm. |
| | D) | a gain from exchanging foreign currencies. |
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| 18.
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Which of the following items should NOT be reported in the extraordinary items section of an Income Statement? |
| | A) | A gain from the insurance company for the flood damage to the plant. |
| | B) | the expropriation of property by a foreign government. |
| | C) | the effects of labour strikes. |
| | D) | A loss on the sale of land taken by government. |
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