1. Which of the following decreases retained earnings but has no effect on assets or liabilities?

a. Issued treasury stock at cost.

b. Recorded an unrealized loss on available-for-sale securities.

c. Issued a cash dividend.

d. Declared a 50% stock dividend.

2. Which of the following is true about foreign currency translation adjustments?

a. They are concerned with consolidating a foreign subsidiary.

b. They are concerned with purchases from a company located in a foreign country.

c. They are concerned with sales to a company located in a foreign country.

d. They are shown net of tax on the income statement.

3. If preferred stock is converted to $1 par value common stock

a. Preferred stock would increase and APIC-P would decrease.

b. Common stock and probably APIC-C would decrease.

c. Total stockholders equity would not change.

d. Total stockholders equity would decrease.

4. Which of the following is true?

a. Investments in other companys common stock is reported under stockholders equity.

b. A corporations own common stock does not have to have a par value.

c. A small stock dividend is recorded without reference to the market value of the stock.

d. None of the above.

5. A corporation has a liability to pay dividends when

a. There is enough cash available for distribution.

b. A dividend is declared by the corporations board of directors.

c. There is a credit balance in the Retained Earnings account.

d. It records a net income for the current period.