Question 1

If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per common share.

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Question 2

Which of the following is not a characteristic of a corporation?

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Question 3

One of the main disadvantages of the corporate form is the

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Question 4

A sale of treasury stock may result in a decrease in paid-in capital. All decreases should be charged to Paid-In Capital from Sale of Treasury Stock.

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Question 5

The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split.

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Question 6

A stock split results in a transfer at market value from retained earnings to paid-in capital.

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Question 7

The amount of a corporation's retained earnings that has been restricted/appropriated should be reported in the notes to the financial statements.

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Question 8

Treasury Stock is listed in the stockholders' equity section on the balance sheet.

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Question 9

A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

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Question 10

A corporation has 10,000 shares of $100 par stock outstanding. If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 40,000.

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Question 11

A restriction/appropriation of retained earnings establishes cash assets that are set aside for a specific purpose.

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Question 12

The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.

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Question 13

Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at which the stock was originally issued are important.

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Question 14

The primary purpose of a stock split is to reduce the number of shares outstanding in order to encourage more investors to enter the market for the company's shares.

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Question 15

The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

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Question 16

Cash dividends are normally paid on shares of treasury stock.

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Question 17

A corporation has 12,000 shares of $20 par stock outstanding that has a current market value of $150. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately $50.

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Question 18

The retained earnings statement may be combined with the income statement.

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Question 19

If 100 shares of treasury stock were purchased for $50 per share and then sold at $60 per share, $1,000 of income is reported on the income statement.

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Question 20

Characteristics of a corporation include

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...

Quiz 12: Corporations: Organization, Stock Transactions, and Dividends