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True False Quiz
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1.
A stock dividend increases shareholders' equity and decreases assets.
A)True
B)False
2.
A stock dividend is recorded by capitalizing an amount of retained earnings.
A)True
B)False
3.
Stock dividends should appear on the balance sheet as a liability if the issue date is after the end of the accounting period.
A)True
B)False
4.
A stock split is an action by the corporation to call its shares and replace them with less than one new share.
A)True
B)False
5.
The retirement of common shares may result in a reduction in retained earnings.
A)True
B)False
6.
The retirement of common shares at a price less than its par value may result in a taxable gain to the corporation.
A)True
B)False
7.
The primary purpose of reporting the gains or losses from discontinued operations (a segment of the business) separately is to more clearly present the results of continuing operations.
A)True
B)False
8.
A gain that is reported separately from continuing operations only because it is unusual is called an extraordinary gain.
A)True
B)False
9.
When a company justifiably changes from one accounting principle to another, the resulting affect on reported income is shown as a prior period adjustment.
A)True
B)False
10.
To calculate the earnings per share, add the net income and the preferred dividends and divide the sum by the total shares of common shares and treasury shares.
A)True
B)False
11.
An appropriation to retained earnings is only done as either a legal or contractual restriction.
A)True
B)False
12.
Prior period adjustments effect both the current income statement and previously prepared income statements.
A)True
B)False
13.
Changes in accounting estimates are applied in determining revenues and expenses for the current and future periods.
A)True
B)False
14.
When computing the weighted-average number of outstanding common shares, the number of shares previously outstanding is retroactively restated to reflect any share split as if it had occurred at the beginning of the year.
A)True
B)False
15.
Share dividends and cash dividends are the same, as they both reduce the corporation’s assets and shareholders’ equity.
A)True
B)False
16.
A loss from damages to a plant caused by an ice storm is treated as an extraordinary item.
A)True
B)False
17.
A gain from exchanging foreign currencies is an extraordinary item.
A)True
B)False





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