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| 1 | |
ABC Company's quarterly tax payments are $5,000 ($20,000/4 quarters). The journal entry to record the first quarterly payment on April 15 would include a debit to the Income Tax Expense account for $5,000. |
| | A) | True |
| | B) | False |
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| 2 | |
Dividends can be paid from appropriated retained earnings. |
| | A) | True |
| | B) | False |
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| 3 | |
The issuance of a stock dividend increases total stockholders' equity. |
| | A) | True |
| | B) | False |
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| 4 | |
The date a dividend is declared is the date a liability is generated. |
| | A) | True |
| | B) | False |
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| 5 | |
The date of declaration usually follows the date of record. |
| | A) | True |
| | B) | False |
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| 6 | |
Stock dividends reduce total Retained Earnings. |
| | A) | True |
| | B) | False |
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| 7 | |
The Common Stock Dividend Distributable account is a stockholders' equity account. |
| | A) | True |
| | B) | False |
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| 8 | |
The Dividends Payable account is debited on the date of declaration of a cash dividend. |
| | A) | True |
| | B) | False |
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| 9 | |
In both a stock dividend and stock split, total stockholders' equity remains the same. |
| | A) | True |
| | B) | False |
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| 10 | |
A 4-for-1 stock split replaces 100,000 shares of $20 par value stock with 400,000 shares of $10 par value stock |
| | A) | True |
| | B) | False |
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| 11 | |
Holders of cumulative preferred stock have a right to be paid both the current and all prior periods' unpaid dividends before any dividend is paid to common stockholders. |
| | A) | True |
| | B) | False |
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| 12 | |
Holders of noncumulative preferred stock have a right to be paid both the current and all prior periods' unpaid dividends before any dividend is paid to common stockholders. |
| | A) | True |
| | B) | False |
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| 13 | |
Purchasing treasury stock can reduce the corporation's assets and equity by unequal amounts. |
| | A) | True |
| | B) | False |
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| 14 | |
Treasury Stock participates in cash dividends. |
| | A) | True |
| | B) | False |
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| 15 | |
Treasury Stock is considered to be an asset of the company. |
| | A) | True |
| | B) | False |
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| 16 | |
The declaration and payment of a stock dividend |
| | A) | increases total stockholders' equity. |
| | B) | increases total assets. |
| | C) | increases the number of shares outstanding. |
| | D) | does all of these. |
| | E) | does none of these. |
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| 17 | |
Corporations issue stock dividends to |
| | A) | reduce market price of the stock. |
| | B) | enable stockholders to avoid income tax liability, since stock dividends are not considered taxable income. |
| | C) | appease stockholders. |
| | D) | do all of these. |
| | E) | do none of these. |
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| 18 | |
If total liabilities are $190,000, total paid-in capital in excess of par is $100,000, and total retained earnings are $180,000, and common stock is $100,000, what is the total of stockholders' equity? |
| | A) | $570,000 |
| | B) | $290,000 |
| | C) | $280,000 |
| | D) | $360,000 |
| | E) | none of these |
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| 19 | |
A stock split has the effect of |
| | A) | decreasing retained earnings. |
| | B) | decreasing the market value of each share. |
| | C) | increasing the total capital. |
| | D) | doing all of these. |
| | E) | doing none of these. |
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| 20 | |
Which date(s) do(es) not require a journal entry? |
| | A) | the date of payment |
| | B) | the date of declaration |
| | C) | the date of record |
| | D) | all of these |
| | E) | none of these |
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| 21 | |
The balance of Retained Earnings on December 31, the end of the fiscal year, is $120,000, and the balance at the beginning of the year was $80,000. If dividends of $40,000 were declared and paid during the year, what was the amount of the net income for the year? |
| | A) | $80,000 |
| | B) | $110,000 |
| | C) | $40,000 |
| | D) | $150,000 |
| | E) | none of these |
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| 22 | |
Which of the following transactions affects total retained earnings? |
| | A) | stock dividend |
| | B) | payment of a previously declared cash dividend |
| | C) | stock split |
| | D) | all of these |
| | E) | none of these |
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| 23 | |
After receiving a stock dividend, a stockholder's proportionate share of the corporation |
| | A) | increases temporarily. |
| | B) | increases permanently. |
| | C) | decreases. |
| | D) | remains the same. |
| | E) | does none of these. |
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| 24 | |
Which of the following is NOT a necessary step in the payment of a cash dividend? |
| | A) | action by the board of directors |
| | B) | adequate cash position |
| | C) | having a sufficient balance in the Retained Earnings account |
| | D) | approval by the stockholders |
| | E) | none of these |
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| 25 | |
A corporation had 50,000 shares of $10 par value common stock outstanding on July 1. Later that same day the board of directors declared a 5% stock dividend when the market value of each share was $25. The entry to record this dividend includes a |
| | A) | Debit of $62,500 to Retained Earnings. |
| | B) | Debit of $25,000 to Retained Earnings. |
| | C) | Credit of $62,500 to Cash |
| | D) | Credit of $50,000 to Common Stock Dividend Distributable. |
| | E) | No entry is needed. |
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| 26 | |
A corporation had 5,000 shares of $10 par value common stock outstanding on July 1. Later that same day the board of directors declared a 10% stock dividend when the market value of each share was $30. The entry to record this dividend includes a |
| | A) | Debit of $50,000 to Retained Earnings. |
| | B) | Debit of $7,500 to Retained Earnings. |
| | C) | Credit of $150,000 to Cash |
| | D) | Debit of $2,500 to Common Stock Dividend Distributable. |
| | E) | No entry is needed. |
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| 27 | |
A company issued 100 shares of $50 par value, cumulative 5 % preferred stock for $150 each. |
| | A) | The journal entry to record this transaction would include: |
| | B) | Debit to Cash for $5,000. |
| | C) | Debit to Cash for $15,000 |
| | D) | Debit to Preferred Stock for $5,000. |
| | E) | Credit Preferred Stock for $15,000. |
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| 28 | |
ABC Co. earns $50,000 net income in 2010 and declares dividends of $5,500 on its noncumulative preferred stock. If ABC Co. has 5,000 weighted-average common shares outstanding during 2010, its basic EPS is |
| | A) | $10 per share. |
| | B) | $11.10 per share. |
| | C) | $9.09 per share. |
| | D) | $8.90 per share. |
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| 29 | |
ABC Co. purchases 2,000 of its own $10 par value stock for $25,500. The entry to record this transaction on the date of purchase would include |
| | A) | Credit to Treasury Stock, Common for $20,000. |
| | B) | Debit to Cash for 25,500 |
| | C) | Credit to Cash for $25,500. |
| | D) | Debit to Treasury Stock, Common for $20,000. |
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| 30 | |
On Jan 1, ABC Co. declares a $5,000 cash dividend on its common stock, to owners of record as of Jan 30, to be paid on February 15. On February 15, the journal entry will include |
| | A) | Credit to Common Dividends Payable for $5,000. |
| | B) | Debit to Cash for 5,000 |
| | C) | Credit to Cash for $5,000. |
| | D) | Credit to Retained Earnings for $5,000. |
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