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Accounting Chapter 15

A corporation must be incorporated in each state in which it does business
Total SE represents
a claim against a portion of the total assets of the enterprise
Costs of issuing stock such as underwriting costs, accounting and legal fees, and printing costs should be recorded as a deferred charge and charged to expense over a period not greater than 25 years.
What is true regarding treasury stock transactions by a corporation?
May decrease but not increase retained earnings
What are the features of preferred stock
NOT voting rights.
convertible into common stock.
preference as to dividends.
callable at the corporation’s option.
Cash dividends are not declared or paid on T-Stocks
The declaration of a property dividend will likely generate a gain or loss on the income statement.
What decreases RE
Property dividends.
NOT Stock splits.
Cash dividends.
Stock dividends.
If a company only has common stock outstanding, book value per share is computed as total stockholders’ equity divided by the number of common stock shares outstanding.
Common stock dividends distributable are reported on the balance sheet as
An addition to common stock
Under IFRS, revaluation surplus is not considered contributed capital.
True (considered part of SE)
In every corporation the one class of stock that represents the basic ownership interest is called
Common stock
The residual interest in a corporation belongs to
common stockholders
Additional paid-in capital is not affected by the issuance of
no-par stock
Which of the following type of stock will not increase Additional Paid-in Capital when issued?
no-par value stock
Treasury stock is classified on the balance sheet as an asset.
Treasury stock sold for less than its cost decreases net income.
Preferred stock has no voting rights.
Cumulative preferred dividends in arrears should be shown in a corporation’s balance sheet as
a footnote
The most common type of preferred stock is
cumulative preferred stock
what is incorrect related to dividends is incorrect
They don’t have to be paid in the same period they are declared
Before declaring a cash dividend, management must consider the
availability of funds
Cash dividends are paid on the basis of the number of shares
Jackson Corporation issued a 100% stock dividend of its common stock which had a par value of $.01, and a market value of $123 before the dividend and $62 after the dividend. At what amount should retained earnings be capitalized for the additional shares issued?
Redeemable preferred stock should be classified as a liability on the balance sheet.
Which of the following country systems of finance have relied more heavily on debt financing, interlocking stock ownership, banker/directors, and worker/shareholder rights?
Japan and Germany
Which one of the following is not a right of common stockholders?
To share proportionally in all management decisions
Characteristics of the corporate form of organization include all of the following :
formality of profit distribution.

capital stock or share system.

variety of ownership interests.

NOT unlimited liability of stockholders.

Which of the following best describes a possible result of treasury stock transactions by a corporation?
May decrease but not increase RE
What isn’t true regarding preferred stock
a preference as to dividends assures the payment of dividends.
Which of the following features of preferred stock makes the security more like debt than an equity instrument?
Which of the following dividends do not reduce total stockholders’ equity?
Stock Dividends
Stock splits increase total stockholders’ equity
At the date of declaration of a large common stock dividend, the entry should include
a debit to RE
The rate of return on common stock equity is computed by dividing:
net income less preferred dividends by average common stockholders’ equity.
The accounting for treasury stock retirements under IFRS
may have the excess charged to paid-in capital, depending on the original transaction related to the issuance of the stock.
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