Chapter 13 Flashcards
(16 cards)
Preferred dividends are subtracted from net income when computing earnings per share
True
Which of the following statements is false regarding cash dividends?
B.
A journal entry is required on the date of record where liabilities are increased and stockholders’ equity decreases
Stock that has been issued and is still in the hands of stockholders is called ______ stock.
A.
Outstanding
When a company announces a 2-for-1 stock split (check all that apply)
A.
There is no effect on assets, liabilities, or total stockholders’ equity
Your answer is correct.
B.
The market price of the stock is typically cut in half
This is the correct answer.
C.
The par value of the stock is cut in half
A small stock dividend increases Paid-In Capital but decreases Retained Earnings.
True
A debit balance in the Retained Earnings account is called a
B.
Deficit
On the declaration date of a stock dividend, the Stock Dividends Payable account is increased with a credit.
False
Generally Accepted Accounting Principles requires companies to report earnings per share on the balance sheet.
False
Generally Accepted Accounting Principles requires any large stock dividends to be accounted for based on the stock’s market value at the time of distribution.
False
Which of the following statements are true regarding the issuance of a small stock dividend to common stockholders? (check all that apply)
A.
The Common Stock Dividend Distributable account is credited for the par value of the stock
Your answer is correct.
B.
The Stock Dividends account is debited on the declaration date based on the market value of the stock
Your answer is correct.
C.
The Paid-In Capital in Excess of Par account is credited for the issuance amount above the par value of the stock
Which of the following equations represents the correct calculation of Retained Earnings at the end of the period?
D.
Beginning Retained Earnings + Net Income - Dividends
Which of the following statements are true regarding the issuance of a small stock dividend to common stockholders? (check all that apply)
B.
The Paid-In Capital in Excess of Par account is credited for the issuance amount above the par value of the stock
Your answer is correct.
C.
The Common Stock Dividend Distributable account is credited for the par value of the stock
This is the correct answer.
D.
The Stock Dividends account is debited on the distribution date based on the market value of the stock
The portion of stockholders’ equity that cannot be used for dividends is called
A.
Legal Capital
When treasury stock is resold for less than its cost
B.
The Paid-In Capital from Treasury Stock Transactions account is decreased with a debit up to the amount of its credit balance
This is the correct answer.
Treasury stock is considered a
C.
A contra equity account with a normal debit balance
Whenever a company issues stock, assets increase and stockholders’ equity increases.
True
