Question 11

The dollar amount of total stockholders' equity remains the same when there is a (an)

Issuance of preferred stock in exchange for convertible debentures

Issuance of nonconvertible bonds with detachable stock purchase warrants

Declaration of a stock dividend

Declaration of a cash dividend

Question 12

The par value method of reporting a treasury stock transaction

Will be reported in the balance sheet as a reduction of total stockholders' equity.

Results in no change to total stockholders' equity.

Results in a reduction in the number of shares that are available to be sold to prospective investors.

Assumes constructive retirement of the treasury shares.

Question 13

Which of the following features of preferred stock makes the security more like debt than an equity instrument?

Participating

Voting

Redeemable

Noncumulative

Question 14

Payment of a dividend in stock

Increases the current ratio

Decreases the amount of working capital

Increases total stockholders' equity

Decreases book value per share of stock outstanding

Question 15

The directors of Corel Corporation, whose $40 par value common stock is currently selling at $50 per share, have decided to issue a stock dividend. The corporation has an authorization for 200,000 shares of common, has issued 110,000 shares of which 10,000 shares are now held as treasury stock, and desires to capitalize $400,000 of the retained earnings balance. To accomplish this, the percentage of stock dividend that the directors should declare is

10

8

5

2