7. "Gains" on sales of the reissuance of treasury stock (using the cost method) should be credited to: a. paid-in capital (APIC) from treasury stock. b. capital stock. c. retained earnings. d. other income. 8. If preferred stock is cumulative, then: a. b. c. d. the common stockholders are entitled to current dividends before preferred stockholders can receive dividends.. cash dividends not declared in prior years are lost permanently. the common stockholders are only entitled to a specific percent of the cash dividends, regardless of the amount declared. prior years' cash dividends must be paid to the preferred stockholders before any dividends may be paid to the common stockholders, 9. Authorized capital stock refers to the total number of shares: a. b. c. d. 10. 11. outstanding issued that can be issued in conformity with the corporation's charter. issued, less all treasury shares owned. How should cumulative preferred dividends in arrears be shown in a corporation's statement of financial position? b. c. d. As a footnote Increase in stockholders' equity Increase in current liabilities. Increase in current liabilities for the amount expected to be declared within the year or operating cycle, and increase in long-term liabilities for the balance. Which of the following best describes a possible result of treasury stock transactions by corporations? a. b. C. d. 12. May directly increase but not decrease retained earnings. Will not affect stockholders' equity if the cost method is used. May directly decrease but not increase retained earnings. May decrease but not increase reported net income. The actual conversion of preferred stock into common stock: increases the shares of common stock decreases the shares of common stock a. b. C. increases the shares of preferred stock d. has no effect on the shares of preferred stock