-1. Stockholders' equity represents the current market value of a company. True/False) 2. Companies must report 'gains and losses' on transactions relating to purchases and sales of their Own stock on the income statement as other income or expense. 3. There are never any income statement effects recognized when a purchase or sale of stock or payment of dividends occurs. Acompany's profit declines when dividends are paid because a company must recognize an expense for the amount of the dividend. 4. I 5. If French's loses its dominance in the mustard market and eventually goes "belly up, its preferred shareholders carry senior positions as claimants in bankruptcy over the common shareholders. A re-issuance of treasury stock has the potential to yield a gain or loss on the income statement Cash dividends reduce both cash and retained earnings by the amount of the dividends paid. When a "large" stock dividend is paid out, retained earnings are reduced by the market value of the dividend. 9. 6. 7. ] 8. [ IFRS allows the repurchase of a company's own stock to be reported as a decrease to the common equity amounts in stockholders' equity [ 10. The principal difference in the financial statements of proprietorships, partnerships, and corporations is in the asset section of the balance sheet []11. Corporations are subject to greater degrees of regulation and supervision than are proprietorships and partnerships 12. Stockholders of a corporation have unlimited liability; that is, they are responsible separately and collectively for unsatisfied obligations of the corporation. 13. Corporations pay an income tax only on that portion of their earnings that is distributed to stockholders as dividends. 14. The par value of a stock represents the market value of the stock on the date it is first issued 15. No-par stock refers to the stock of a corporation whose current market price has fallen below its par value 16. The cumulative feature on preferred stock means that regular dividends to preferred stockholders omitted in past years must be paid in addition to the current year's dividend before any dividend distribution may be made to common stockholders. 17. Preferred stockholders compose the basic, residual ownership class in a corporation. 18. For a corporation, the shares of outstanding stock plus the shares of treasury stock equals the shares of issued stock 19. Property or services received in exchange for capital stock should be recorded at the par or stated value of the shares issued. [ I [][ 20. A forward stock split reduces the dollar balance of the stock account whose stock is split. 21. The primary reason for a stock split is to reduce the market price of the stock 22. Treasury stock is classified as a long-term investment in the balance sheet 23. Return on common stockholders' equity is computed by dividing the annual net income available to [ common stockholders by the average common stockholders' equity for the year. 24. If a firm splits its common stock three for one at year-end, then the return on common stockholders equity will be lower than what it would have been without the stock split. 25. The Stock Dividend Distributable account should be classified on the balance sheet as a current liability 26. The accounting for large stock dividends (those over 25%) differs from the accounting for small stock [ dividends (those less than 25%) I 27. Cash dividends become an obligation of the corporation on the date they are declared by the board of directors. 28. Cash dividends are paid to those stockholders who own the shares of stock on the dividend payment [ date. 29. A statement of stockholders' equity includes an analysis of the Retained Earnings account for the accounting period 30. A statement of retained earnings will disclose the amount of net income (or loss) for the accounting period. [