Question 1

The net effect on the corporation's books of the declaration and payment of a cash dividend are to

Accepted Answer

A)  decrease liabilities and decrease shareholders' equity.
B)  increase shareholders' equity and decrease liabilities.
C)  decrease assets and decrease shareholders' equity.
D)  increase assets and increase shareholders' equity.E) A) and C)
F) None of the above

Question 2

A stock split will

Accepted Answer

A)  have no effect on retained earnings.
B)  increase total share capital.
C)  increase total assets.
D)  decrease the number of shares issued.E) C) and D)
F) A) and D)

Question 3

Use the following information for questions 
On July 15, 2015, the board of directors of George Easton Limited declared a cash dividend of $0.50 per share on 84,000 common shares.The dividend is to be paid on August 15, 2015, to shareholders of record on July 31, 2015.
-The effects of the journal entry to record the payment of the dividend on August 15, 2015, are to

Accepted Answer

A)  decrease shareholders' equity and decrease liabilities.
B)  decrease liabilities and decrease assets.
C)  increase shareholders' equity and increase liabilities.
D)  increase shareholders' equity and decrease assets.E) A) and B)
F) None of the above

Question 4

The trading of a corporation's shares on the secondary market has no impact on the corporation's financial position.

Accepted Answer

A) True 
 B)False

Question 5

Return on common shareholders' equity is calculated by dividing profit by ending shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 6

A debit balance in retained earnings is called a

Accepted Answer

A)  loss.
B)  capital surplus.
C)  deficit.
D)  contributed capital.E) B) and D)
F) A) and D)

Question 7

Indicate the respective effects of the declaration of a cash dividend on the following statement of financial position sections:

Accepted Answer

The answer of Indicate the respective effects of the declaration...

Question 8

Which of the following factors does not affect the initial market price of a share?

Accepted Answer

A)  the company's anticipated future profit
B)  the legal value of the share
C)  the current state of the economy
D)  the expected dividend rate per shareE) B) and C)
F) A) and D)

Question 9

The number of common shares authorized can never be greater than the number of shares issued.

Accepted Answer

A) True 
 B)False

Question 10

Those most responsible for the major policy decisions of a corporation are the

Accepted Answer

A)  shareholders.
B)  board of directors.
C)  management.
D)  employees.E) C) and D)
F) A) and C)

Question 11

JKL Inc.has 10,000, $2, noncumulative preferred shares and 150,000 common shares issued.What is the total annual dividend on the preferred shares?

Accepted Answer

A)  $10,000
B)  $20,000
C)  $150,000
D)  $300,000E) A) and D)
F) B) and C)

Question 12

Retained earnings that are restricted are unavailable for dividends.

Accepted Answer

A) True 
 B)False

Question 13

Retained earnings represents the amount of cash available for dividends.

Accepted Answer

A) True 
 B)False

Question 14

A stock dividend results in a decrease in

Accepted Answer

A)  current liabilities.
B)  profit.
C)  share capital.
D)  retained earnings.E) None of the above
F) C) and D)

Question 15

The payout ratio is calculated by dividing the cash dividends paid on common shares by retained earnings.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements regarding the date of a cash dividend declaration is not true?

Accepted Answer

A)  The dividend can be cancelled once it has been declared.
B)  The corporation is committed to a legal, binding obligation.
C)  The board of directors formally authorizes the cash dividend.
D)  A liability account must be created or increased.E) None of the above
F) B) and C)

Question 17

Which one of the following events would not require a journal entry on a corporation's books?

Accepted Answer

A)  2 for 1 stock split
B)  100% stock dividend
C)  2% stock dividend
D)  $1 per share cash dividendE) All of the above
F) A) and B)

Question 18

Which of the following is not a right or preference associated with preferred shares?

Accepted Answer

A)  the right to vote
B)  first claim to dividends
C)  preference to corporate assets in case of liquidation
D)  to receive dividends in arrears before common shareholders receive dividendsE) None of the above
F) B) and C)

Question 19

Use the following information for questions 
On January 1, Brunhilde Corporation had 240,000 common shares issued.On March 17, the company declared a 5% stock dividend to be distributed on March 30.The market value of the shares was $9 on March 17 and $12 on March 30.
-The entry to record the transaction of March 17 would include a

Accepted Answer

A)  credit to Retained Earnings for $12,000.
B)  credit to Cash for $108,000.
C)  credit to Stock Dividends Distributable for $108,000.
D)  debit to Stock Dividends Distributable for $144,000.E) A) and D)
F) C) and D)

Question 20

Which of the following statements about dividends is not correct?

Accepted Answer

A)  Cash dividends are generally declared quarterly as a dollar amount per share.
B)  Dividends can be declared on both preferred and common shares.
C)  The board of directors is obligated to declare dividends.
D)  Dividends can be in cash or stock.E) C) and D)
F) All of the above

Exam 11: Reporting and Analyzing Stockholders Equity

Retained earnings that are restricted are unavailable for dividends.

Correct Answer
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JKL Inc.has 10,000, $2, noncumulative preferred shares and 150,000 common shares issued.What is the total annual dividend on the preferred shares?

Correct Answer
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The number of common shares authorized can never be greater than the number of shares issued.

Correct Answer
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A debit balance in retained earnings is called a

Correct Answer
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Which of the following statements about dividends is not correct?

Correct Answer
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Correct Answer
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Those most responsible for the major policy decisions of a corporation are the

Correct Answer
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Which one of the following events would not require a journal entry on a corporation's books?

Correct Answer
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A stock split will

Correct Answer
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A stock dividend results in a decrease in

Correct Answer
verified

Which of the following statements regarding the date of a cash dividend declaration is not true?

Correct Answer
verified

The trading of a corporation's shares on the secondary market has no impact on the corporation's financial position.

Correct Answer
verified

Retained earnings represents the amount of cash available for dividends.

Correct Answer
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Which of the following is not a right or preference associated with preferred shares?

Correct Answer
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The payout ratio is calculated by dividing the cash dividends paid on common shares by retained earnings.

Correct Answer
verified

Return on common shareholders' equity is calculated by dividing profit by ending shareholders' equity.

Correct Answer
verified

Indicate the respective effects of the declaration of a cash dividend on the following statement of financial position sections:

Correct Answer
verified

The net effect on the corporation's books of the declaration and payment of a cash dividend are to

Correct Answer
verified

Which of the following factors does not affect the initial market price of a share?

Correct Answer
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Correct Answer
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Exam 11: Reporting and Analyzing Stockholders Equity

Retained earnings that are restricted are unavailable for dividends.

Correct AnswerverifiedShow Answer

JKL Inc.has 10,000, $2, noncumulative preferred shares and 150,000 common shares issued.What is the total annual dividend on the preferred shares?

Correct AnswerverifiedShow Answer

The number of common shares authorized can never be greater than the number of shares issued.

Correct AnswerverifiedShow Answer

A debit balance in retained earnings is called a

Correct AnswerverifiedShow Answer

Which of the following statements about dividends is not correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Those most responsible for the major policy decisions of a corporation are the

Correct AnswerverifiedShow Answer

Which one of the following events would not require a journal entry on a corporation's books?

Correct AnswerverifiedShow Answer

A stock split will

Correct AnswerverifiedShow Answer

A stock dividend results in a decrease in

Correct AnswerverifiedShow Answer

Which of the following statements regarding the date of a cash dividend declaration is not true?

Correct AnswerverifiedShow Answer

The trading of a corporation's shares on the secondary market has no impact on the corporation's financial position.

Correct AnswerverifiedShow Answer

Retained earnings represents the amount of cash available for dividends.

Correct AnswerverifiedShow Answer

Which of the following is not a right or preference associated with preferred shares?

Correct AnswerverifiedShow Answer

The payout ratio is calculated by dividing the cash dividends paid on common shares by retained earnings.

Correct AnswerverifiedShow Answer

Return on common shareholders' equity is calculated by dividing profit by ending shareholders' equity.

Correct AnswerverifiedShow Answer

Indicate the respective effects of the declaration of a cash dividend on the following statement of financial position sections:

Correct AnswerverifiedShow Answer

The net effect on the corporation's books of the declaration and payment of a cash dividend are to

Correct AnswerverifiedShow Answer

Which of the following factors does not affect the initial market price of a share?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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