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ACCT 10

The declaration of dividends reduces the amount of the corporations taxable income.
Which of the following statements is FALSE regarding the issuance of stock versus bonds to raise capital for a corporation.
Corporation
In which of the following organization forms are the owners legal responsibility for the debt of the business limited to the amount they invested in the business.
Corporation
select the type of business that is most likely to obtain large amounts of resources by issuing stock.
A corporations resources are limited to their individual stockholders resources.
Which of the following is NOT a characteristic of a corporation?
Cash dividends paid by a corporation are deductible as expenses by the corporation.
Which of the following is NOT a characteristic of a corporation?
shareholders who have limited liability.
Characteristics of a corporation include:
double taxation of dividends.
One of the main DISADVANTAGES of the corporate form is the:
corporations are subject to more governmental regulations.
A DISADVANTAGE of the corporate form of business entity is:
ownership rights are easily transferred.
Under the corporate form business organization:
Government Regulation.
Which one of the following would NOT be considered an advantage of the corporate form of organization?
enhanced because of the limited liability and the ease of share transferability.
The ability of a corporation to obtain capitol is:
The number of shares actually in the hands of the stockholder are called outstanding shares.
Which of the following statement is TRUE with regard to equity capitol?
Maximum number of shares of stock that a company can legally issue.
Authorized shares represent the:
Number of shares that the corporation has distributed to owners to date.
Issued shares represent the:
Number of shares that are currently held by stockholders.
Outstanding shares represent the:
Arbitrary amount that establishes a minimum price for the stock when it is first used.
Par value represents the:
The number of outstanding shares is twice the number that was outstanding before the split.
If a corporation declares a 2-for-1 stock split, which of the following is true?
A stockholder who previously held 100 shares will have 200 shares after the split.
If a corporation declares a 2-for-1 stock split, which of the following is true?
the par value will be reduced to half of the pre-split par value.
If a corporation declares a 2-for-1 stock split, which of the following is true?
The balances in the corporations cash account to determine cash available for dividends.
When a corporation decides whether to pay a cash dividend, which of the following is an important consideration?
Equity decreases.
When a corporation declares a cash dividend, which of the following is true?
No entry is necessary.
After a corporation declares a cash dividend, what takes place on the date of the record?
Liabilities decrease.
When a corporation pays a previously declared cash dividend, which of the following is true?
Equity remains the same.
When a corporation declares a stock dividend, which of the following is true?
Cash decreases
When a corporation declares a small stock dividend, which of the following is FALSE?
At the end of the declaration.
When is the liability for cash dividends created?
to decrease the market value of the stock.
What is the primary reason for a stock split?
Dividends are distributed to preferred stockholders before common stockholders.
Many stockholders choose to invest in preferred stock because:
The notes to the financial statement.
Dividends in arrears are required to be reported in:
Number of previously issued shares that have been repurchased by the corporation.
Treasury shares represent the:
the cost of treasury stock is a reduction in stockholders equity.
Which of the following is statement is true regarding a corporations purchase of treasury stock?
Additional paid-in capitol.
the excess of sales price of treasury stock over its cost should be credited to:
the company earned for each share of outstanding common stock.
Earnings per share is an indication of how much:
Financing activities
Cash paid for preferred stock dividends should be shown on the statement of cash flows under:
receipts from the issuance of capital stock.
On the statement of cash flows, the cash flows from financing activities section would include:
the cash flows from financing activities section.
Cash dividends paid on common stock would be reported in the statement of cash flows in:

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