Question 11

Restricting retained earnings for the cost of treasury stock purchased is a

	A.	contractual restriction.
	B.	voluntary restriction.
	C.	stock restriction.
	D.	legal restriction.

Question 12

The declaration of a stock dividend will

	A.	increase total assets.
	B.	increase total liabilities.
	C.	increase paid-in capital.
	D.	change the total of stockholders' equity.

Question 13

Dillon Corporation splits its common stock 2 for 1, when the market value is $38 per share. Prior to the split, Dillon had 50,000 shares of $25.00 par value common stock issued and outstanding. After the split, the par value of the stock

	A.	is reduced to $12.50 per share.
	B.	is reduced to $12.00 per share.
	C.	remains the same.
	D.	is reduced to $25.00 per share.

Question 14

Retained earnings is

	A.	a part of the paid-in capital of the corporation.
	B.	always equal to the amount of cash that the corporation has generated from operations.
	C.	a part of the stockholders' claim on the total assets of the corporation.
	D.	closed at the end of each accounting period.

Question 15

ABC, Inc. has 1,000 shares of 6%, $70 par value, cumulative preferred stock and 53,000 shares of $3 par value common stock outstanding at December 31, 2010. What is the annual dividend on the preferred stock?

	A.	$600 in total
	B.	$4,200 in total
	C.	$0.06 per share
	D.	$60 per share

Question 16

A corporation purchases 7,000 shares of its own $3 par common stock for $11 per share, recording it at cost. What will be the effect on total stockholders' equity?

	A.	Decrease by $77,000
	B.	Increase by $21,000
	C.	Decrease by $77,000
	D.	Increase by $21,000

Question 17

Dailey Company is a publicly held corporation whose $1 par value stock is actively traded at $22 per share. The company issued 2,600 shares of stock to acquire land recently advertised at $68,640. When recording this transaction, Dailey Company will

	A.	debit Land for $57,200.
	B.	credit Common Stock for $57,200.
	C.	credit Paid-In Capital in Excess of Par Value for $66,040.
	D.	debit Land for $68,640.

Question 18

Turquoise and Topaz Sisters had retained earnings of $14,300 on the balance sheet but disclosed in the footnotes that $1,700 of retained earnings was restricted for plant expansion and $1,800 was restricted for bond repayments. Cash of $1,700 had been set aside for the plant expansion. How much of retained earnings is available for dividends?

	A.	$10,800
	B.	$14,300
	C.	$12,600
	D.	$9,100

Question 19

West, Inc. has a net income of $410,000 for 2010, and there are 130,000 weighted-average shares of common stock outstanding. Dividends declared and paid during the year amounted to $40,000 on the preferred stock and $96,000 on the common stock. The earnings per share for 2010 is

	A.	$3.15.
	B.	$0.74.
	C.	$2.85.
	D.	$3.01.

Question 20

In determining earnings per share, dividends for the current year on noncumulative preferred stock should be

	A.	deducted from net income whether declared or not.
	B.	disregarded.
	C.	deducted from net income only if declared.
	D.	added back to net income whether declared or not.