MULTIPLE CHOICE. (4 points each) Choose the one alternative that best completes the statement or answer the question. 1) A liquidating dividend: A) Represents a distribution of a corporation's profits to the stockholders. B) Occurs whenever a corporation distributes non-cash assets as a dividend to its stockholders C) Occurs when a corporation distributes shares of its own stock as a dividend rather than cash D) Represents a return of invested capital to a corporation's owners, the stockholders 2) On January 31, Village Bank had 500,000 shares of S3 par value common stock outstanding. On that date, the company declared a 10% stock dividend when the market price of the stock was $62 per share. The immediate effect of this dividend upon Village Bank was A) A reduction in cash of $3.794.500 B) A liability to the stockholders of SI 50,000 C) A reduction in retained earnings of $150,000. D) A reduction in retained earnings of S3,100,000 3) 3) On January 31, 2018, Village Bank had 300,000 shares of $2 par value common stock outstanding. On that date, the company declared a 14% stock dividend when the market price of the stock was $37 per share. The immediate effect of this dividend upon Village Bank was A) A reduction in cash of $2.590,000 B) A liability to the stockholders of $140.000 C) A reduction in retained earnings of $2.590,000 D) A reduction in retained earnings of S140,000 4) If a material accounting error was made in a prior year, that error A) Should be reflected, net of taxes, on the retained earnings statement B) Should be reflected as a change in accounting principle. C) Should be reflected on the current year's income statement D) Should be considered as a non-recurring item, and shown, net of taxes, on the income statement 5) 5) Doogle Corporation sold a segment of its operations in 2017 and suffered an loss in 2018 that was both unusual and infrequent. Which of the following would be the most useful in attempting to predict Doogle's performance for 2019? A) Doogle's net income in 2017 and 2018 B) Doogle's income from continuing operations in 2017 and 2018 C) Doogle's retained camnings at the end of 2018 D) Doogle's total assets at the end of 2018. 6) Unusual and infrequent non-recurring items are found on the income statement: A) Before income from continuing operations B) After prior period adjustments. C) After discontinued operations D) Before discontinued operations 7) A restriction of retained earnings: A) Appears in the statement of retained earnings as a reduction of ending retained carnings B) Appears in the liability section of the balance sheet. C) Limits the dollar amount of dividends a corporation may declare. D) Reduces the dollar amount of retained earnings shown in the balance sheet. The following information applies to the questions displayed below) The stockholders' equity section of the balance sheet of Crammond Corporation at December 31, appears as follows 5 700 000 150,000 Stockholders' Equity $3 preferred stock, S100 par. 10,000 shares authorized Common stock, S2 par, 100,000 shares authorized Additional Paid-in Capital: From issuance of preferred stock From issuance of common stock Total paid-in capital Retained carings Total Stockholders' equity IND 725.000 1.755.000 850.000 $ 205,000 8) How many shares of common stock are outstanding? A) 75,000 B) 100,000 110,000 D) 80,000 [The following information applies to the questions displayed below.) The stockholders' equity section of the balance sheet of Caesar Corporation at December 31, 2018 appears as follows: (The company engaged in no treasury stock transactions prior to 2018) 800,000 150.000 Stockholders' Equity $2 preferred stock, S100 par, 10,000 shares authorized, 8,000 shares issued $800,000 Common stock, S2 par, 100,000 shares authorized, 75,000 shares issued, 5.000 are held in the treasury 150.000 Additional Paid-in Capital: From issuance of preferred stock From issuance of common stock From treasury stock transactions From common stock dividends Total paid in capital Retained earnings ($40,000 equal to cost of treasury stock is not available for dividends) 80,000 225.000 000 26000 1.289.000 Less treasury stock at cost: 5,000 common shares) Total Stockholders' equity 500.000 1.799.000 (40.000 1.749,000 9) A small stock dividend of 1,000 shares was declared and distributed during 2018 What was the market price per share on the date of declaration? A) S2 per share B) S28.00 per share C) 516 per share D) $8.00 per share 10) A 2-for-stock split: A) Increases the number of outstanding shares of common stock, but par value per share remains the same as before the split B) Should logically cause the market price per Share to drop by approximately SOM C) is accounted for in the same way as a 100% stock dividend. D) is recorded by transferring the par value of additional shares from retained camnings to the common stock account
