ACC 206 Week 11 Final Exam – Strayer



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Chapter14 Through 19


CORPORATIONS:DIVIDENDS,RETAINEDEARNINGS,ANDINCOMEREPORTING


CHAPTERSTUDYOBJECTIVES


1.Preparetheentriesforcashdividendsandstockdividends.

2.Identifytheitemsreportedinaretainedearningsstatement.

3.Prepareandanalyzeacomprehensivestockholders'equitysection.

4.Describetheformandcontentofcorporationincomestatements.

5.Computeearningspershare.

TRUE-FALSESTATEMENTS

1.         Dividendsmaybedeclaredandpaidincashor stock.

2.     Cashdividends arenotaliability ofthecorporationuntiltheyaredeclaredbytheboardof directors.

3.     Theamountofacashdividendliabilityisrecordedonthedateofrecordbecauseitison that datethatthepersonsor entitieswhowillreceivethedividendare identified.

4.     A10%stockdividendwillincreasethenumberofsharesoutstandingbutthebookvalue pershare willdecrease.

5.     A3for1commonstocksplitwillincreasetotalstockholders'equitybutreducetheparor stated valuepershareofcommonstock.

6.     Retainedearningsrepresentstheamount of cashavailablefordividends.

7.     Netincomeofacorporationshouldbeclosedtoretainedearningsandnetlossesshould be closed to paid-incapitalaccounts.

8.     A debitbalanceintheRetained Earningsaccountis identifiedasadeficit.

9.     AcorrectioninincomeofapriorperiodinvolveseitheradebitorcredittotheRetained Earningsaccount.

10.     Priorperiodadjustmentsto incomearereportedinthecurrentyear'sincomestatement.

11.     Retainedearningsthat are restrictedareunavailablefordividends.

12.     Restrictedretainedearnings areavailableforpreferredstockdividendsbutunavailablefor commonstockdividends.

13.     Aretainedearningsstatementshowsthesameinformationasacorporationincome statement.

14.     Adetailedstockholders'equitysectioninthebalancesheetwilllistthenamesof individualswhoare eligibletoreceivedividendsonthedateofrecord.

15.     CommonStockDividendsDistributableisshownwithinthePaid-inCapitalsubdivisionof thestockholders'equitysectionof thebalancesheet.

16.     Returnoncommonstockholders’equityiscomputedbydividingnetincomebyending stockholders’ equity.

17.     Manycompaniesprepareastockholders’equitystatementinsteadofpresentinga detailed stockholders’ equity sectioninthebalancesheet.

18.     Amajordifferenceamongcorporations,proprietorships,andpartnershipsisthata corporation's incomestatementreportsincometaxexpense.

19.     A corporationincursincometaxexpense onlyifitpaysdividendsto stockholders.
Corporations:Dividends,RetainedEarnings,andIncomeReporting          14-5

20.     Incometaxexpenseusuallyappearsasaseparatesectiononacorporationincome statement.

21.     Earningspershareiscalculatedbydividingnetincomebytheweightedaveragenumber ofshares ofpreferredstock and commonstockoutstanding.

22.     Preferreddividendspaidareaddedbacktonetincomeincalculatingearningspershare for commonstockholders.

23.     Earningspershareindicatesthenetincomeearnedbyeachshareofoutstanding commonstock.

24.     Earningsper shareis reportedfor both preferredandcommonstock.

25.     Mostcompaniesarerequiredtoreportearningspershareonthefaceoftheincome statement.

Additional True-FalseQuestions

26.     A dividendbasedonpaid-incapitalis termeda liquidatingdividend.

27.     CommonStockDividendsDistributableisreportedasadditionalpaid-incapitalinthe stockholders' equitysection.

28.     Apriorperiodadjustmentisreportedasanadjustmentofthebeginningbalanceof RetainedEarnings.

29.     Incometaxexpenseandtherelatedliabilityforincometaxespayablearerecordedwhen taxes are paid.

30.     Earningsper shareis reportedonlyforcommonstock.





MULTIPLECHOICEQUESTIONS

31.     Eachof thefollowingdecreasesretainedearningsexcepta a.cashdividend.
b.liquidatingdividend. c.stockdividend.
d.All of thesedecreaseretainedearnings.

32.     Eachof thefollowingdecreasestotal stockholders'equityexcepta a.cashdividend.
b.liquidatingdividend. c.stockdividend.
d.Allof thesedecreasetotalstockholders'equity.

33.     Whichoneofthefollowingisnotnecessaryinorderforacorporationtopayacash dividend?
a.Adequatecash
b.Approvalof stockholders
c.Declarationof dividendsbytheboardof directors d.Retainedearnings

34.     Ifa corporationdeclaresa dividendbasedupon paid-in capital,it isknownasa a.scrip dividend.
b.propertydividend. c.paiddividend.
d.liquidatingdividend.

35.     Thedateonwhichacashdividendbecomesabindinglegalobligationison the a.declarationdate.
b.date of record. c.paymentdate.
d.lastdayofthefiscalyear-end.

36.     The effectofthedeclarationofacashdividendbytheboardof directorsis to

         Increase         
a.Stockholders'equity b.          Assets
c.            Liabilities d. Liabilities
         Decrease         
Assets Liabilities
Stockholders'equity Assets


37.     Thecumulativeeffectofthedeclarationandpaymentofacashdividendonacompany's financial statementsis to
a.decreasetotal liabilitiesandstockholders'equity. b.increasetotalexpensesandtotal liabilities.
c.increasetotal assetsand stockholders'equity. d.decreasetotalassetsandstockholders'equity.
Corporations:Dividends,RetainedEarnings,andIncomeReporting          14-7

38.     CommonStock DividendsDistributableisclassifiedasa(n) a.assetaccount.
b.stockholders'equityaccount. c.expenseaccount.
d.liabilityaccount.

39.     The effectofastockdividend isto
a.decreasetotalassetsandstockholders'equity. b.change thecompositionofstockholders'equity. c.decreasetotal assetsandtotal liabilities.
d.increasethebook valuepershareofcommonstock.

40.     Ifacorporationdeclaresa10%stockdividendonitscommonstock,theaccounttobe debited onthedateofdeclaration is
a.CommonStock DividendsDistributable. b.CommonStock.
c.Paid-inCapitalinExcessofPar. d.RetainedEarnings.

41.       Whichoneofthefollowingeventswouldnotrequireaformaljournalentryona corporatio

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