Principles Of Accounting Ch. 13-17

Treasury stock should be reported in the financial statements of a corporation as a(n): a. investment. b. liability. c. deduction from total paid-in capital. d. deduction from total paid-in capital and retained earnings.

Treasury stock is a. stock issued by the U.S. Treasury Department. b. stock purchased by a corporation and held as an investment in its treasury. c. corporate stock issued by the treasurer of a company. d. a corporation's own stock which has been issued and subsequently reacquired but not retired.

Additional paid-in capital includes all of the following except a. paid-in capital from treasury stock. b. paid-in capital in excess of par. c. paid-in capital in excess of stated value. d. paid-in capital in excess of book value.

Which of the following statements reflects the transferability of ownership rights in a corporation? a. If a stockholder decides to transfer ownership, he must transfer all of his shares. b. A stockholder may dispose of part or all of his shares. c. A stockholder must obtain permission from the board of directors before selling shares. d. A stockholder must obtain permission from at least three other stockholders before selling shares.

Victory Corporation sold 400 shares of treasury stock for $45 per share. The cost for the shares was $35. The entry to record the sale will include a a. credit to Gain on Sale of Treasury Stock for $14,000. b. credit to Paid-in Capital from Treasury Stock for $4,000. c. debit to Paid-in Capital in Excess of Par for $4,000. d. credit to Treasury Stock for $18,000.

VAS Corporation had net income of $500,000 and paid dividends of $800,000 to common stockholders and $20,000 to preferred stockholders in 2014. VAS Corporation's common stockholders' equity at the beginning and end of 2014 was $1,740,000 and $2,260,000, respectively. There are 200,000 weighted-average shares of common stock outstanding. VAS Corporation's return on common stockholders' equity was a. 10%. b. 24%. c. 20%. d. 17.7%.

Which of the following statements about retained earnings restrictions is incorrect? a. Many states require a corporation to restrict retained earnings for the cost of treasury stock purchased. b. Long-term debt contracts may impose a restriction on retained earnings as a condition for the loan. c. The board of directors of a corporation may voluntarily create retained earnings restrictions for specific purposes. d. Retained earnings restrictions are generally disclosed through a journal entry on the books of a company.

Prior period adjustments are reported a. in the footnotes of the current year's financial statements. b. on the current year's balance sheet. c. on the current year's income statement. d. on the current year's retained earnings statement.

Corporations generally issue stock dividends in order to a. increase the market price per share. b. exceed stockholders' dividend expectations. c. increase the marketability of the stock. d. decrease the amount of capital in the corporation.

The declaration of a stock dividend will a. increase paid-in capital. b. change the total of stockholders' equity. c. increase total liabilities. d. increase total assets.

A credit balance in retained earnings represents a. the amount of cash retained in the business. b. a claim on specific assets of the corporation. c. a claim on the aggregate assets of the corporation. d. the amount of stockholders' equity exempted from the stockholders' claim on total assets.

The per share amount normally assigned by the board of directors to a large stock dividend is a. the market value of the stock on the date of declaration. b. the average price paid by stockholders on outstanding shares. c. the par or stated value of the stock. d. zero.

A stock split a. may occur in the absence of retained earnings. b. will increase total paid-in capital. c. will increase the total par value of the stock. d. will have no effect on the par value per share of stock.

Reserves include each of the following except a. other comprehensive income items. b. revaluation surplus. c. share premium. d. unrealized gains on available-for-sale securities.

Identify the effect the declaration and distribution of a stock dividend has on the par value per share. a. Increase b. Decrease c. Increase or decrease d. No effect

Common Stock Dividends Distributable is classified as a(n) a. asset account. b. stockholders' equity account. c. expense account. d. liability account.

The date a cash dividend becomes a binding legal obligation to a corporation is the a. declaration date. b. earnings date. c. payment date. d. record date.

Retained earnings are occasionally restricted a. to set aside cash for dividends. b. to keep the legal capital associated with paid-in capital intact. c. due to contractual loan restrictions. d. if preferred dividends are in arrears.