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Exam 12: Corporations: Organization, Stock Transactions, and Dividends

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Question 31

Multiple Choice

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Those most responsible for the major policy decisions of a corporation are the

A) management
B) board of directors
C) employees
D) stockholders

E) A) and B)
F) A) and C)

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Question 32

Multiple Choice

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Which of the following statements is not true about a 2-for-1 split?

A) Par value per share is reduced to half of what it was before the split.
B) Total contributed capital increases.
C) The market price will probably decrease.
D) A stockholder with ten shares before the split owns twenty shares after the split.

E) A) and B)
F) A) and C)

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Question 33

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Sabas Company has 40,000 shares of $100 par, 1% preferred stock and 100,000 shares of $50 par common stock issued and outstanding. The following amounts were distributed as dividends: $\begin{array}{lr}\text { Year 1: } & \$ 50,000 \\\text { Year 2: } & 90,000 \\\text { Year 3: } & 130,000\end{array}$ ​ Determine the dividends per share for preferred and common stock for each year.

If Dakota Company issues 1,500 shares of $6 par common stock for $75,000,

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

The liability for a dividend is recorded on which of the following dates?

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

Alma Corp. issues 1,000 shares of $10 par common stock at $14 per share. When the transaction is recorded, credit(s) are made to

Twenty percent of all businesses in the United States are corporations, and they account for 80% of the total business dollars generated.

Which statement below is not a reason for a corporation to buy back its own stock?

Organizational expenses are classified as intangible assets on the balance sheet.

A reduction of par or stated value of stock results from a

Significant changes in stockholders' equity are reported in

If common stock is issued for an amount greater than par value, the excess should be credited to

Sabas Company has 20,000 shares of $100 par, 1% noncumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: $\begin{array}{lr}\text { Year 1: } & \$ 10,000 \\\text { Year 2: } & 15,000 \\\text { Year 3: } & 90,000\end{array}$ ​ Determine the dividends per share for preferred and common stock for each year.

Preferred stockholders must receive their current-year dividends before the common stockholders can receive any dividends.

The two main sources of stockholders' equity are​

The net increase or decrease in Retained Earnings for a period is recorded by closing entries.

A corporation purchased 1,000 shares of its own $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale?