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CHAPTER 15 STOCKHOLDERS’ EQUITY TRUE-FALSE —Conceptual Answer No. Description T 1. State a corporation incorporates in. F 2. Definition of preemptive right. T 3. Common stock as residual interest. F 4. Earned capital definition. T 5. Reporting true no-par stock. F 6. Allocating proceeds in lump sum sales. T 7. Accounting for stock issued for noncash consideration. F 8. Definition of treasury stock. F 9. Reporting treasury stock under cost method. T 10. Selling treasury stock below cost. F 11. Participating preferred stock. T 12. Callable preferred stock. T 13. Restricting legal capital. F 14. Disclosing dividend policy. F 15. Affect of dividends on total stockholders’ equity. T 16. Property dividends definition. T 17. Accounting for small stock dividend. F 18. Stock splits and large stock dividends. F 19. Computing rate of return on common stock equity. T 20. Computing payout ratio. MULTIPLE CHOICE —Conceptual Answer No. Description c 21. Nature of stockholders' interest. b 22. Pre-emptive right. a 23. Pre-emptive right. b S 24. Definition of legal capital. c S 25. Definition of residual owner. c 26. Nature of stockholders' equity. d 27. Sources of stockholders' equity. d 28. Classification of stockholders' equity. d 29. Allocation methods for a lump sum issuance. b 30. Capital stock issued in payment of services. a 31. Costs of issuing capital stock. b 32. Creation of "secret reserves." a P 33. Authorized shares. d S 34. Par value stock. b S 35. Legal restrictions for profit distributions. a S 36. Acquisition of treasury shares. d P 37. Treasury shares definition. c 38. Purchase of treasury stock at greater than par value.
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Test Bank for Intermediate Accounting, Twelfth Edition MULTIPLE CHOICE —Conceptual (cont.) Answer No. Description a 39. Sale of treasury stock. a 40. Reissued treasury stock at less than acquisition cost. b 41. Reissued treasury stock at greater than acquisition cost. c 42. Effect of treasury stock transactions. c 43. Preferred stock—debt features. b 44. Cumulative feature of preferred stock. b P 45. Reporting redeemable stock. c S 46. Reporting dividends in arrears. c 47. Issued vs. outstanding common stock. b 48. Timing of entry to record dividends. c 49. Shares entitled to receive a cash dividend. c 50. Accounting for a property dividend. a 51. Distribution of a property dividend. a 52. Liquidating dividend. b 53. Entry to record a liquidating dividend. b 54. Effects of a stock dividend. b 55. Effects of a stock dividend. b 56. Effect of a large stock dividend. b 57. Large stock dividend. a 58. Small stock dividend. a 59. Small stock dividend. b 60. Classification of stock dividends distributable. b 61. Effect of stock splits and stock dividends. c
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