Question 1

Retained earnings represents the amount of cash available for dividends.

Accepted Answer

A) True 
 B)False

Question 2

The declaration and distribution of a stock dividend will

Accepted Answer

A)  increase total shareholders' equity.
B)  increase total assets.
C)  decrease total assets.
D)  have no effect on total assets.E) A) and D)
F) A) and C)

Question 3

Use the following information for questions 
Fair Corporation issues 7,500 preferred shares for $25 per share.
-In the statement of financial position, the effects of the above transaction will be reported under

Accepted Answer

A)  Liabilities.
B)  Retained Earnings.
C)  Share Capital.
D)  Accumulated Other Comprehensive Income.E) A) and D)
F) A) and B)

Question 4

When retained earnings are restricted, total retained earnings

Accepted Answer

A)  are unaffected.
B)  increase.
C)  decrease.
D)  may increase or decrease.E) A) and D)
F) B) and C)

Question 5

The payout ratio is calculated by dividing

Accepted Answer

A)  total cash dividends paid by retained earnings.
B)  dividends paid per share by net income.
C)  total cash dividends paid by net income.
D)  dividends paid per share by year-end share price.E) B) and C)
F) None of the above

Question 6

Accumulated other comprehensive income is reported in the shareholders' equity section of the statement of financial position for a publicly-traded company.

Accepted Answer

A) True 
 B)False

Question 7

Corporations generally issue stock dividends in order to

Accepted Answer

A)  increase the market price per share.
B)  exceed shareholders' dividend expectations.
C)  increase the marketability of the shares.
D)  decrease the amount of capital in the corporation.E) All of the above
F) None of the above

Question 8

Cambridge Corp.declared a 5% stock dividend.Will Wales owned 300 shares of Cambridge before the dividend.Cambridge shares were trading at $21 before the dividend.Which of the following will be true after the dividend is distributed?

Accepted Answer

A)  The total market value of Will's shares was $6,300 before the stock dividend but will probably decrease after the stock dividend.
B)  The total market value of Will's shares was $6,300 before the stock dividend and $6,615 after the stock dividend.
C)  Will owned 300 shares before the stock dividend and 315 shares after the stock dividend.
D)  Fewer investors will be able to buy Cambridge shares.E) None of the above
F) A) and B)

Question 9

The number of shares that may be issued according to the corporation's articles of incorporation is referred to as the

Accepted Answer

A)  authorized shares.
B)  issued shares.
C)  unissued shares.
D)  redeemable shares.E) A) and B)
F) None of the above

Question 10

Use the following information for questions 
Fair Corporation issues 7,500 preferred shares for $25 per share.
-The entry to record the transaction will consist of a debit to Cash for $187,500 and a credit or credits to

Accepted Answer

A)  Preferred Shares for $187,500.
B)  Preferred Shares for $100,000 and Share Capital for $87,500.
C)  Preferred Shares for $100,000 and Retained Earnings for $87,500.
D)  Investment in Preferred Shares for $187,500.E) A) and D)
F) All of the above

Question 11

A retained earnings restriction would appear in the financial statements under

Accepted Answer

A)  share capital.
B)  retained earnings.
C)  notes to financial statements.
D)  a liability.E) B) and C)
F) A) and B)

Question 12

Use the following information for questions 
On January 1, BearBack Corporation had 300,000 common shares issued.On April 10, the company declared a 10% stock dividend to be distributed on April 30.The market value of the shares was $7 on April 10 and $10 on April 30.
-The entry to record the transaction of April 10 would include a

Accepted Answer

A)  credit to Retained Earnings for $30,000.
B)  credit to Cash for $210,000.
C)  credit to Stock Dividends Distributable for $210,000.
D)  debit to Stock Dividends Distributable for $300,000.E) B) and C)
F) A) and D)

Question 13

When preferred shares are cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements about dividends is not correct?

Accepted Answer

A)  Cash dividends are generally declared quarterly as a dollar amount per share.
B)  Dividends can be declared on both preferred and common shares.
C)  The board of directors is obligated to declare dividends.
D)  Dividends can be in cash or stock.E) A) and C)
F) B) and C)

Question 15

Use the following information for questions 
On July 15, 2022, the board of directors of George Easton Limited declared a cash dividend of $0.50 per share on 84,000 common shares.The dividend is to be paid on August 15, 2022, to shareholders of record on July 31, 2022.
-The journal entry to be recorded on July 15, 2022, will include a

Accepted Answer

A)  debit to Dividends Payable.
B)  debit to Dividends Declared.
C)  credit to Cash.
D)  credit to Retained Earnings.E) A) and B)
F) C) and D)

Question 16

The board of directors must assign a per share value to a stock dividend declared that is equal to the

Accepted Answer

A)  average cost.
B)  zero.
C)  original issue price.
D)  fair value.E) C) and D)
F) None of the above

Question 17

The declaration of a stock dividend will

Accepted Answer

A)  increase share capital.
B)  change total shareholders' equity.
C)  increase total liabilities.
D)  increase total assets.E) A) and B)
F) None of the above

Question 18

Which of the following is not a significant date with respect to dividends?

Accepted Answer

A)  the declaration date
B)  the incorporation date
C)  the record date
D)  the payment dateE) A) and D)
F) A) and C)

Question 19

$3 cumulative preferred shares means that each preferred shareholder is eligible to receive

Accepted Answer

A)  a quarterly dividend of $3 per share.
B)  an annual dividend of $3 per share.
C)  a monthly dividend of $3 per share.
D)  no dividend.E) B) and C)
F) All of the above

Question 20

The main purpose of a stock split is to

Accepted Answer

A)  decrease the marketability of the stock by increasing the price.
B)  increase the marketability of the stock by increasing the price.
C)  increase the marketability of the stock by decreasing the price.
D)  reduce the number of issued shares.E) A) and B)
F) None of the above

Exam 11: Reporting and Analyzing Shareholders Equity

When retained earnings are restricted, total retained earnings

Correct Answer
verified

The board of directors must assign a per share value to a stock dividend declared that is equal to the

Correct Answer
verified

$3 cumulative preferred shares means that each preferred shareholder is eligible to receive

Correct Answer
verified

Retained earnings represents the amount of cash available for dividends.

Correct Answer
verified

Cambridge Corp.declared a 5% stock dividend.Will Wales owned 300 shares of Cambridge before the dividend.Cambridge shares were trading at $21 before the dividend.Which of the following will be true after the dividend is distributed?

Correct Answer
verified

Accumulated other comprehensive income is reported in the shareholders' equity section of the statement of financial position for a publicly-traded company.

Correct Answer
verified

The number of shares that may be issued according to the corporation's articles of incorporation is referred to as the

Correct Answer
verified

Use the following information for questions Fair Corporation issues 7,500 preferred shares for $25 per share. -The entry to record the transaction will consist of a debit to Cash for $187,500 and a credit or credits to

Correct Answer
verified

Corporations generally issue stock dividends in order to

Correct Answer
verified

Which of the following statements about dividends is not correct?

Correct Answer
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Correct Answer
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Which of the following is not a significant date with respect to dividends?

Correct Answer
verified

The declaration and distribution of a stock dividend will

Correct Answer
verified

A retained earnings restriction would appear in the financial statements under

Correct Answer
verified

The declaration of a stock dividend will

Correct Answer
verified

Use the following information for questions Fair Corporation issues 7,500 preferred shares for $25 per share. -In the statement of financial position, the effects of the above transaction will be reported under

Correct Answer
verified

The payout ratio is calculated by dividing

Correct Answer
verified

When preferred shares are cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Correct Answer
verified

The main purpose of a stock split is to

Correct Answer
verified

Correct Answer
verified

Exam 11: Reporting and Analyzing Shareholders Equity

When retained earnings are restricted, total retained earnings

Correct AnswerverifiedShow Answer

The board of directors must assign a per share value to a stock dividend declared that is equal to the

Correct AnswerverifiedShow Answer

$3 cumulative preferred shares means that each preferred shareholder is eligible to receive

Correct AnswerverifiedShow Answer

Retained earnings represents the amount of cash available for dividends.

Correct AnswerverifiedShow Answer

Cambridge Corp.declared a 5% stock dividend.Will Wales owned 300 shares of Cambridge before the dividend.Cambridge shares were trading at $21 before the dividend.Which of the following will be true after the dividend is distributed?

Correct AnswerverifiedShow Answer

Accumulated other comprehensive income is reported in the shareholders' equity section of the statement of financial position for a publicly-traded company.

Correct AnswerverifiedShow Answer

The number of shares that may be issued according to the corporation's articles of incorporation is referred to as the

Correct AnswerverifiedShow Answer

Use the following information for questions Fair Corporation issues 7,500 preferred shares for $25 per share. -The entry to record the transaction will consist of a debit to Cash for $187,500 and a credit or credits to

Correct AnswerverifiedShow Answer

Corporations generally issue stock dividends in order to

Correct AnswerverifiedShow Answer

Which of the following statements about dividends is not correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a significant date with respect to dividends?

Correct AnswerverifiedShow Answer

The declaration and distribution of a stock dividend will

Correct AnswerverifiedShow Answer

A retained earnings restriction would appear in the financial statements under

Correct AnswerverifiedShow Answer

The declaration of a stock dividend will

Correct AnswerverifiedShow Answer

Use the following information for questions Fair Corporation issues 7,500 preferred shares for $25 per share. -In the statement of financial position, the effects of the above transaction will be reported under

Correct AnswerverifiedShow Answer

The payout ratio is calculated by dividing

Correct AnswerverifiedShow Answer

When preferred shares are cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Correct AnswerverifiedShow Answer

The main purpose of a stock split is to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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