Statement of Changes in Equity

Question 1

how is additional paid in capital (APIC) recorded?

Answer 1

the excess amount received over par or stated value

Question 2

_____ have voting rights for the corporation’s board of directors and corporate policies

Answer 2

common stockholders

Question 3

_________ have priority over common stockholders for dividends and liquidation, no voting rights

Answer 3

preferred stockholders

Question 4

stock is reported at _____ value

Answer 4

par or stated

Question 5

issue price of stock is typically _________ than the par or stated value

Answer 5

greater

Question 6

treasury stock is a contra accounting making it a __________ to stockholder’s equity

Answer 6

reduction

**a company can never carry its own stock as an investment (ie. trading securities, investment in equity securities)

Question 7

change in assets =

Answer 7

change in liabilities + change is SE

Question 8

change in SE is used to calculate change in RE

change in SE=

Answer 8

change in capital stock + change in APIC + change in RE

Question 9

change in RE =

Answer 9

net income - dividends

Question 10

if there is a decrease in FV, debit ______ and credit _______

Answer 10

loss; asset

Question 11

TRUE OR FALSE

RE is decreased by any type of dividend declared

Answer 11

TRUE

Question 12

recording a property dividend (nonreciprocal transfers to owners) requires a two-step process:

Answer 12

1. adjust the asset to its FV near or at the time of distribution (date od declaration)
   if FV differs from net carrying value (net book value), gain or loss is recognized
2. record liability (dividends payable) and reduce RE for the property’s FV