Acco 112 Chapter 14

ACCO 112 Chapter 14

Read and answer CAREFULLY

1. Each of the following decreases retained earnings except a
a. cash dividend.
b. liquidating dividend.
c. stock dividend.
d. All of these decrease retained earnings.

2. Each of the following decreases total stockholders' equity except a
a. cash dividend.
b. liquidating dividend.
c. stock dividend.
d. All of thesedecrease total stockholders' equity.

3. Which one of the following is not necessary in order for a corporation to pay a cash dividend?
a. Adequate cash
b. Approval of stockholders
c. Declaration of dividends by the board of directors
d. Retained earnings

4. If a corporation declares a dividend based upon paid-in capital, it is known as a
a. scrip dividend.
b. property dividend.c. paid dividend.
d. liquidating dividend.

5. The date on which a cash dividend becomes a binding legal obligation is on the
a. declaration date.
b. date of record.
c. payment date.
d. last day of the fiscal year-end.

6. The effect of the declaration of a cash dividend by the board of directors is to
Increase Decrease
a. Stockholders' equity Assets
b. AssetsLiabilities
c. Liabilities Stockholders' equity
d. Liabilities Assets

7. The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to
a. decrease total liabilities and stockholders' equity.
b. increase total expenses and total liabilities.
c. increase total assets and stockholders' equity.
d. decrease total assets andstockholders' equity.

8. Common Stock Dividends Distributable is classified as a(n)
a. asset account.
b. stockholders' equity account.
c. expense account.
d. liability account.

9. The effect of a stock dividend is to
a. decrease total assets and stockholders' equity.
b. change the composition of stockholders' equity.
c. decrease total assets and total liabilities.
d. increasethe book value per share of common stock.

10. If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is
a. Common Stock Dividends Distributable.
b. Common Stock.
c. Paid-in Capital in Excess of Par.
d. Retained Earnings.

11. Which one of the following events would not require a formal journal entry on acorporation's books?
a. 2 for 1 stock split
b. 100% stock dividend
c. 2% stock dividend
d. $1 per share cash dividend

12. Stock dividends and stock splits have the following effects on retained earnings:
Stock Splits Stock Dividends
a. Increase No change
b. No change Decrease
c. Decrease Decrease
d. No change No change

13. Dividends are predominantly paid in
a. earnings.b. property.
c. cash.
d. stock.

14. If a stockholder receives a dividend that reduces retained earnings by the fair market value of the stock, the stockholder has received a
a. large stock dividend.
b. cash dividend.
c. contingent dividend.
d. small stock dividend.

15. Of the various dividends types, the two most common types in practice are
a. cash and large stock.
b. cashand property.
c. cash and small stock.
d. property and small stock.

16. Regular dividends are declared out of
a. Paid-in Capital in Excess of Par.
b. Treasury Stock.
c. Common Stock.
d. Retained Earnings.


17. A corporation is not committed to a legal obligation when it declares
a. a cash dividend.
b. either a cash dividend or a stock dividend.
c. a stock dividend.
d.a distribution date.

18. Which of the following is not a significant date with respect to dividends?
a. The declaration date
b. The incorporation date
c. The record date
d. The payment date

19. On the dividend record date,
a. a dividend becomes a current obligation.
b. no entry is required.
c. an entry may be required if it is a stock dividend.
d. Dividends Payable is...