TRUE OR FALSE:

1) Stockholders of a corporation are not personally liable for the corporation's debt.

2) The journal entry for the purchase of treasury stock includes a credit to Cash.

3) A small stock dividend, a large stock dividend and a stock split have no effect on total assets.

4) To complete the statement of cash flows, the net change in cash and cash balances must be shown.

MULTIPLE CHOICE:

1) Outstanding stock represents shares of stock that ________.

A) are held by the stockholders

B) are sold for the highest price

C) have been authorized by state law

D) have been issued but may or may not be held by stockholders

2) Orleans, Inc. was incorporated on January 1, 2014. Orleans issued 4,000 shares of common stock and 1,200 shares of preferred stock on that date. The preferred stock is cumulative, $100 par, with an 12% dividend rate. Orleans has not paid any dividends yet. In 2017, Orleans had its first profitable year, and on November 1, 2017, Orleans declared a total dividend of $63,000. What is the total amount that will be paid to preferred shareholders?

A) $14,400

B) $57,600

C) $13,200

D) $63,000

3) Which of the following is a reason for a company to announce a stock split?

A) to reward investors

B) to increase total stockholders' equity

C) to decrease the market price at which the stock is trading

D) to provide the shareholders with something of value, when the company cannot afford a cash dividend

4) Harrison Recyclers Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for 2017:

1. Retained Earnings, beginning balance, $138,000

2. Retained Earnings, ending balance, $122,000

3. There is a net loss of $15,000 for the year.

What is the amount of dividends declared during the year?

A) $31,000

B) $2,000

C) $1,000

D) $16,000