Accounting Chapter 15 – Flashcards
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A corporation must be incorporated in each state in which it does business
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false
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Total SE represents
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a claim against a portion of the total assets of the enterprise
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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.
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False
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What is true regarding treasury stock transactions by a corporation?
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May decrease but not increase retained earnings
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What are the features of preferred stock
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NOT voting rights. convertible into common stock. preference as to dividends. callable at the corporation's option.
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Cash dividends are not declared or paid on T-Stocks
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True
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The declaration of a property dividend will likely generate a gain or loss on the income statement.
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True
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What decreases RE
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Property dividends. NOT Stock splits. Cash dividends. Stock dividends.
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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.
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True
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Common stock dividends distributable are reported on the balance sheet as
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An addition to common stock
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Under IFRS, revaluation surplus is not considered contributed capital.
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True (considered part of SE)
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In every corporation the one class of stock that represents the basic ownership interest is called
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Common stock
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The residual interest in a corporation belongs to
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common stockholders
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Additional paid-in capital is not affected by the issuance of
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no-par stock
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Which of the following type of stock will not increase Additional Paid-in Capital when issued?
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no-par value stock
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Treasury stock is classified on the balance sheet as an asset.
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False
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Treasury stock sold for less than its cost decreases net income.
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False
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Preferred stock has no voting rights.
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True
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Cumulative preferred dividends in arrears should be shown in a corporation's balance sheet as
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a footnote
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The most common type of preferred stock is
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cumulative preferred stock
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what is incorrect related to dividends is incorrect
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They don't have to be paid in the same period they are declared
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Before declaring a cash dividend, management must consider the
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availability of funds
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Cash dividends are paid on the basis of the number of shares
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outstanding
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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?
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Par-Value
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Redeemable preferred stock should be classified as a liability on the balance sheet.
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True
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Which of the following country systems of finance have relied more heavily on debt financing, interlocking stock ownership, banker/directors, and worker/shareholder rights?
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Japan and Germany
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Which one of the following is not a right of common stockholders?
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To share proportionally in all management decisions
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Characteristics of the corporate form of organization include all of the following :
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formality of profit distribution. capital stock or share system. variety of ownership interests. NOT unlimited liability of stockholders.
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Which of the following best describes a possible result of treasury stock transactions by a corporation?
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May decrease but not increase RE
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What isn't true regarding preferred stock
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a preference as to dividends assures the payment of dividends.
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Which of the following features of preferred stock makes the security more like debt than an equity instrument?
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Redeemable
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Which of the following dividends do not reduce total stockholders' equity?
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Stock Dividends
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Stock splits increase total stockholders' equity
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False
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At the date of declaration of a large common stock dividend, the entry should include
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a debit to RE
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The rate of return on common stock equity is computed by dividing:
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net income less preferred dividends by average common stockholders' equity.
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The accounting for treasury stock retirements under IFRS
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may have the excess charged to paid-in capital, depending on the original transaction related to the issuance of the stock.
