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Exam 13: Accounting for Corporations

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Question 61

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A stock split is the distribution of additional shares of stock to stockholders according to their percent of ownership.

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Question 62

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Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

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Question 63

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What is a corporation? Identify the key advantages and disadvantages of corporations.

A stock dividend does not reduce a corporation's assets or its stockholders' equity.

Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares. At the time of the stock dividend, the market value per share was $12. The entry to record this dividend is:

When no-par stock is not assigned a stated value, the total amount received is recorded in the Common Stock account.

A corporation may be authorized to issue both common and preferred stock.

The declaration of cash dividends increases retained earnings.

What is a stock split? How is a stock split different from a stock dividend?

A liability for dividends exists:

The following data has been collected about Keller Company's stockholders' equity accounts: $\begin{array}{lr}\text { Common stock } \$ 10 \text { par value } 20,000 \text { shares } & \$ 100,000\\\text { authorized and } 10,000 \text { shares issued, } 9,000 \text { shares outstanding }\\\text { Paid-in capital in excess of par value, common stock } & 50,000 \\\text { Retained earnings } & 25,000 \\\text { Treasury stock } & 11,500\end{array}$ Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury stock is:

All stock dividends are recorded at par value so there would never be a credit to the paid-in capital in excess of par value account.

Purchasing treasury stock reduces the corporation's assets and stockholders' equity by unequal amounts.

The date of record is the date that directors vote to pay a cash dividend to shareholders.

Retained earnings generally consist of a company's cumulative net income less any net losses and dividends declared since its inception.

Corporations may buy back their own stock for any of the following reasons except to:

The number of shares that a corporation's charter allows it to sell is referred to as:

Prior period adjustments are reported in the:

The following data were reported by a corporation: $\begin{array} { l } \text {Authorized shares } &20,000\\ \text {Issued shares } &15,000\\ \text {Treasury shares } &3,000\\\end{array}$ The number of outstanding shares is:

A stock dividend, declared by a corporations's directors, is a distribution of additional shares of the corporation's own stock to its stockholders without the receipt of any payment in return.