Question : 64. A 2-for-1 stock split will: A. Increase the total par value of : 1229394

 

 

64. A 2-for-1 stock split will: 
A. Increase the total par value of the stock and increase the number of shares outstanding.
B. Decrease the total par value of the stock and increase the number of shares outstanding.
C. Not change the total par value of the stock and increase the number of shares outstanding.
D. Increase total stockholders’ equity.

 

 

65. The entry to record the issuance of common stock at a price above its par value includes: 
A. A credit to Cash.
B. A credit to a liability account for the difference between the price paid by the stockholders and the par value of the stock.
C. A credit to Additional Paid-in Capital: Common Stock.
D. A debit to Common Stock.

 

 

66. When a corporation issues capital stock at a price higher than the par value: 
A. The amount received over par value increases retained earnings.
B. The entire issue price is credited to the Capital Stock account.
C. The amount received in excess of par value constitutes profit to the issuing corporation.
D. The amount received in excess of par value becomes part of paid-in capital.

 

 

67. When no-par stock is issued: 
A. The entire amount received is credited to the Additional Paid-in Capital account.
B. The issue price is credited to the Capital Stock account.
C. There is no legal capital created because there is no par or stated value.
D. The transaction usually involves only an exchange for non-cash assets or services, since the stock has no value on the stock exchanges.

 

 

68. Which statement is true about a stock split? 
A. Total shareholders’ equity increases.
B. Total shareholders’ equity decreases.
C. Total shareholders’ equity remains the same.
D. A change in total stockholders’ equity depends upon whether it is a 2-for-1 split or a 1-for-2 split.

 

 

69. Which of the following is not a characteristic of most preferred stock? 
A. Dividends that vary as income changes.
B. Preference as to dividends.
C. Preference as to assets in the event of liquidation of the company.
D. No voting power.

 

 

70. The financial statements of a corporation that failed during the current year to pay any dividends on its cumulative preferred stock should: 
A. Include the amount of the omitted dividends among its current liabilities.
B. Include a footnote disclosing the amount of the dividends in arrears.
C. Show the amount of the omitted dividends as a deduction from retained earnings.
D. List the omitted dividends as a long-term liability.

 

 

71. If the preferred stock of a corporation is cumulative: 
A. Dividends on preferred stock are guaranteed.
B. Dividends cannot be declared in an amount less than that stated on the stock certificate.
C. Preferred stockholders participate in dividends paid in excess of a stated amount on the common shares.
D. Dividends in arrears must be paid on preferred stock before any dividend can be paid on common stock.

 

 

72. Treasury stock: 
A. Is an asset.
B. Increases total stockholders’ equity.
C. Decreases total stockholders’ equity.
D. Does not change total stockholders’ equity.

 

 

73. The purchase of treasury stock for cash will: 
A. Increase stockholders’ equity.
B. Not increase nor decrease stockholders’ equity.
C. Decrease stockholders’ equity.
D. Not change total assets.

 

 

 

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