CHAP018 - Chapter 18 Shareholders' Equity True/False...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 18 Shareholders' Equity True/False Questions 1. Paid-in capital must consist solely of amounts invested by shareholders. Answer: False Learning Objective: 6 Level of Learning: 1 2. Stock designated as preferred usually has preferential rights over other classes of stock relative to dividends and liquidating distributions. Answer: True Learning Objective: 7 Level of Learning: 1 3. Dividends in arrears on cumulative preferred stock are reported as current liabilities. Answer: False Learning Objective: 7 Level of Learning: 1 4. Receivables from share purchase contracts are reported as current and noncurrent assets depending upon the terms of the underlying note. Answer: False Learning Objective: 3 Level of Learning: 1 5. Noncash assets received as consideration for the issue of stock are always valued based on the fair market value of the stock. Answer: False Learning Objective: 3 Level of Learning: 2 6. Treasury stock transactions never increase retained earnings or net income. Answer: True Learning Objective: 5 Level of Learning: 1 7. Restrictions on retained earnings must be disclosed in the body of the balance sheet. Answer: False Learning Objective: 6 Level of Learning: 1 8. Cash dividends become a binding liability as of the record date. Answer: False Learning Objective: 7 Level of Learning: 1 9. Under GAAP, the declaration of a property dividend may require the recognition of a gain or loss if the fair value of the property is different from its carrying value on the declaration date. Answer: True Learning Objective: 7 Level of Learning: 2 10. Stock dividends may cause a reduction in retained earnings, but they never reduce total shareholders' equity. Answer: True Learning Objective: 8 Level of Learning: 1 Spiceland/Sepe/Tomassini, Intermediate Accounting, Fourth Edition 249
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 18 Shareholders' Equity Matching Pair Questions Use the following to answer questions 11-20: 11-20. Use I = Increase, D = Decrease, or N = No effect, to indicate the effect on retained earnings for each of the listed transactions. 11. ____ Declaration of a property dividend. 12. ____ Net income for the year. 13. ____ Purchase of treasury stock at a cost greater than the original issue price (cost method). 14. ____ Purchase of treasury stock at a cost greater than the original issue price (par value method). 15. ____ Purchase of treasury stock at a cost less than the original issue price (cost method). 16. ____ Purchase of treasury stock at a cost less than the original issue price (par value method). 17. ____ Issue common stock. 18. ____ Resale of treasury stock for less than cost (cost method), assuming no previous treasury stock sales. 19. ____ Resale of treasury stock for more than cost (cost method). 20.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 38

CHAP018 - Chapter 18 Shareholders' Equity True/False...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online