Question : 91. Corporations sometimes distribute assets other than cash when paying a : 1245761

 

 

91. Corporations sometimes distribute assets other than cash when paying a dividend.  Which of the following is not true? 
A. Such a dividend is known as a dividend in kind.
B. Such a dividend is never known as a property dividend.
C. The amount debited to Retained Earnings equals the fair value of the assets distributed.
D. When this fair value differs from the carrying value of the assets distributed, the firm recognizes a gain or loss in net income.
E. The accounting for property dividends resembles that for cash dividends, except that when the firm pays the dividend, it credits the asset given up, rather than Cash.

 

92. Corporations sometimes distribute assets other than cash when paying a dividend.  Which of the following is not true? 
A. Such a dividend is sometimes known as a dividend in kind.
B. Such a dividend is sometimes known as a property dividend.
C. The amount debited to Retained Earnings equals the fair value of the assets distributed.
D. When this fair value differs from the carrying value of the assets distributed, the firm does not recognizes a gain or loss in net income.
E. The accounting for property dividends resembles that for cash dividends, except that when the firm pays the dividend, it credits the asset given up, rather than Cash.

 

93. The stock dividend relabels a portion of the retained earnings that had been legally available for dividend declarations as a more permanent form of shareholders’ equity, because  
A. the firm has used some funds represented by past earnings to expand plant facilities or to replace assets at increased prices or to retire bonds.
B. the firm does not have this cash available for cash dividends
C. the stock dividend does not affect the availability of cash on hand or cash that the firm has already invested; rather, the stock dividend signals to readers of the balance sheet, perhaps more clearly than before, the commitment to investment.
D. all of the above
E. none of the above

 

94. Stock dividends  
A. have little economic substance for shareholders.
B. result in a proportionate increase in the number of shares held by each shareholder, but does not change that shareholder’s ownership interest or proportionate voting power.
C. result in decreases to book value per common share, but each shareholder has a proportionately larger number of shares, so the total book value of each shareholder’s interest remains unchanged.
D. result in the decline of market value per share should be commensurate with the proportional increase in shares, but all else equal, the total market value of an individual’s shares should not change.
E. all of the above

 

95. Which of the following is not true regarding the issuance of a stock dividend? 
A. The stock dividend has little economic substance for shareholders.
B. The stock dividend does not change each shareholder’s ownership interest or proportionate voting power.
C. The stock dividend results in decreases to book value per common share, but the total book value of each shareholder’s interest remains unchanged.
D. The total market value of an individual’s shares should not change.
E. The stock dividend does not change the number of shares each shareholder owns.

 

96. Distinguishing a stock dividend from a stock split can sometimes cause difficulties. Usually firms treat small-percentage distributions, say  less than a  _____  increase in the number of shares, as stock dividends and larger ones as stock splits.  
A. 5%
B. 10%
C. 25%
D. 50%
E. 100%

 

97. Which of the following is/are true regarding stock splits? 
A. The corporation issues additional shares of stock to shareholders in proportion to their existing holdings.
B. The firm receives no additional assets.
C. Firms may execute a stock split by reducing the par value of the common stock in proportion to the new number of shares issued.
D. Firms may execute a stock split by not making any change in par value but by issuing additional shares of the same par value.
E. all of the above

 

98. A stock split accomplished by altering the par value in direct proportion to the number of new shares 
A. does not require a journal entry.
B. decreases Additional Paid-In Capital or Retained Earnings.
C. increases Additional Paid-In Capital or Retained Earnings.
D. decreases Cash or Retained Earnings.
E. increases Cash or Retained Earnings.

 

99. A stock split that is accomplished by a change in par value that is not proportional to the new number of shares or if the firm does not change the par value, the firm 
A. does not require a journal entry.
B. decreases Additional Paid-In Capital or Retained Earnings.
C. increases Additional Paid-In Capital or Retained Earnings.
D. decreases Cash or Retained Earnings.
E. increases Cash or Retained Earnings.

 

100. Which of the following is/are true regarding a reverse stock split?  
A. Firms reduce the number of outstanding shares by increasing the par value of the stock.
B. Firms reduce the number of outstanding shares by canceling outstanding shares.
C. A reverse stock split usually increases the market value per share in inverse proportion to the reverse split.
D. Managers and governing boards might use reverse stock splits to keep the market price per share within some target trading range.
E. all of the above

 

 

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