1. What does the account Retained Earnings represent? (a) The amount of Cash retained by the business. (b) The amount of net earnings that have not been distributed as dividends. (c) The original investment in the business by stockholders. (d) Amount of income subject to corporate taxation.

2. Which of the following is not one of the three dates related to a cash dividend declaration and issue? (a) Declaration date. (b) Anniversary date. (c) Payment date. (d) Date of record.

3. How does the general journal entry for a stock split differ from one for a stock dividend? (a) Stock splits require a debit to Retained Earnings for face amount of stock. (b) Stock splits require a debit to Retained Earnings for market value of stock. (c) Stock splits require a credit to the stock account on date of declaration for the par value of stock. (d) A stock split does not require a journal entry except a memorandum entry.

4. Which of the following will decrease total stockholders equity? a. stock dividend b. stock split c. appropriation of retained earnings d. cash dividend

5. The balance of an appropriated retained earnings account is reduced: a. as expenses are accrued. b. as payments are made. c. when the board of directors passes a resolution to return the amount to unappropriated retained earnings. d. when net income is known for the year.

6. Why would a corporation purchase its own stock as treasury stock? (a) When the stock selling price has gotten very high. (b) When the corporation wants to reduce total stockholders equity. (c) When the corporation has issued more stock than authorized. (d) When the corporation has a large line of credit available.

7. What is a convertible bond? A. A bond that may be converted to stock. B. A form of stockholder equity. C. A bond that may change its interest payments. D. A bond that may change its maturity date.