Please answer the following questions, Thanks!

Instructions: Designate the best answer for each of the following questions. 1. Discontinued operations appear in the income statement between a. extraordinary items and the cumulative effect of changes in accounting principle. b. the cumulative effect of changes in accounting principle and net income. c. gross prot and income tax expense. d. none of the above. 2. Fancy Fashions bought machinery at a cost of $80,000 on January 1, 2000. On January 1, 2002, they decided to switch from the straight-line to the double declining- balance method of amortization. The machinery has no salvage value and an eight- year useful life. The cumulative effect of this change in accounting principle before income taxes is a. $10,000. b. $20,000. c. $35,000. d. $15,000. 3. Patterson Corporation issued 3,000, no par value common shares at $2 per share in exchange for a truck. The truck had a fair market value of $20,000. The entry to record this transaction includes a credit to Common Shares for a. $14,000. b. $3.000. c. $20,000. d. $6,000. 4. Modine Manufacturing declared an 8% stock dividend when it had 150,000, no par value common shares, issued at $3 per share. The market price per common share was $12 per share when the dividend was declared. The entry to record this dividend declaration includes a credit to a. Retained Earnings for $36,000. b. Stock DividendsCommon for $144,000. c. Common Shares for $36,000. Common Stock Dividends Distributable for $144,000. a result of a stock dividend, d. 5. As a. total shareholders' equity remains the same. b. c. d. total shareholders' equity increases. total shareholders' equity decreases. retained eamings remain unchanged. 6. Callable preferred shares are paid a xed interest rate. may be called by their issuer at a specied price. are a liability. may be exchanged for common shares by their owner. 9.0.59: 7. Kaline Corporation issued 150 of $25 convertible preferred shares for $3,750. Each preferred share was convertible into one, par value common share, issued at $10 per share. The entry to record the conversion of sixteen convertible preferred shares into common shares includes a credit to a. Common Shares. b. Preferred Shares. c. Retained Eamings. d. Dividends Declared. 8. The repurchase of a company's own shares a. increases total assets and decreases total shareholders' equity. b. decreases total assets and decreases total shareholders' equity. c. increases total assets and increases total shareholders' equity. d. decreases total assets and increases total shareholders' equity. 9. Sankowski splits its 50,000, no par value common shares on a 2-for-1 basis. The company should record the transaction as a a. debit to Common Stock Dividends Distributable and a credit to Common Shares. b. memo entry. c. debit to Stock DividendsCommon and a credit to Common Stock Dividends Distributable. d. debit to Retained Earnings and a credit to Common Shares. 10. lntraperiod tax allocation a. refers to the procedure of associating income taxes with their related item of income. b. is against the law. c. is necessary if dividends for the period exceed retained earnings. d. involves spreading the income tax effect of an event over several accounting periods. 11. An extraordinary item a. occurs frequently. b. is typical of normal business activity. c. is subject to management discretion. d. does not meet any of these criteria. 12. If Chu Corporation has total shareholders' equity of $1,500,000, preferred share-holders' equity of $500,000, $50,000 of preferred dividends in arrears, $50,000 of current preferred dividends, and 90,000 common shares, book value per common share is a. $15.56. b. $10.00. c. $16.67. (I. $11 .11. 13. Restrictions of retained earnings a. are reported on the balance sheet as liabilities. b. provide insurance coverage for contingencies. c. do not change total shareholders' equity. d. are reported as expenses on the income statement. 14 Ownership of common shares ordinarily carries the right to . declare dividends. . establish a drawings account. a b c. enter into contracts for the corporation. d vote on corporate actions that require shareholder approval. 15. A corporation is formed when a. it borrows money. b. it receives a charter from its president. c. it is granted by-laws by the federal government. d. none of the above 16. The characteristics of being unusual, infrequent, and not subject to management determination are associated with a. accounting changes. b prior period adjustments. c. discontinued operations. d none of the above. 17 Common Stock Dividends Distributable is reported in the balance sheet . as an addition to retained earnings. . in additional contributed capital. in contributed capital as an addition to common shares issued. as a liability. a b c d