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ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS ques...
ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS questions
ch15.doc-CHAPTER 15 STOCKHOLDERS’ E...
ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS questions
Page 14
Test Bank for Intermediate Accounting, Thirteenth Edition
60.
The balance in Common Stock Dividend Distributable should be reported as a(n)
a.
deduction from common stock issued.
b.
addition to capital stock.
c.
current liability.
d.
contra current asset.
61.
A feature common to both stock splits and stock dividends is
a.
a transfer to earned capital of a corporation.
b.
that there is no effect on total stockholders' equity.
c.
an increase in total liabilities of a corporation.
d.
a reduction in the contributed capital of a corporation.
62.
What effect does the issuance of a 2-for-1 stock split have on each of the following?
Par Value per Share
Retained Earnings
a.
No effect
No effect
b.
Increase
No effect
c.
Decrease
No effect
d.
Decrease
Decrease
63.
Which one of the following disclosures should be made in the equity section of the
balance sheet, rather than in the notes to the financial statements?
a.
Dividend preferences
b.
Liquidation preferences
c.
Call prices
d.
Conversion or exercise prices
64.
The rate of return on common stock equity is calculated by dividing
a.
net income less preferred dividends by average common stockholders’ equity.
b.
net income by average common stockholders’ equity.
c.
net income less preferred dividends by ending common stockholders’ equity.
d.
net income by ending common stockholders’ equity.
65.
The payout ratio can be calculated by dividing
a.
dividends per share by earnings per share.
b.
cash dividends by net income less preferred dividends.
c.
cash dividends by market price per share.
d.
dividends per share by earnings per share and dividing cash dividends by net income
less preferred dividends.
66.
Younger Company has outstanding both common stock and nonparticipating, non-
cumulative preferred stock. The liquidation value of the preferred is equal to its par value.
The book value per share of the common stock is
unaffected
by
a.
the declaration of a stock dividend on preferred payable in preferred stock when the
market price of the preferred is equal to its par value.
b.
the declaration of a stock dividend on common stock payable in common stock when
the market price of the common is equal to its par value.
c.
the payment of a previously declared cash dividend on the common stock.
d.
a 2-for-1 split of the common stock.
15 - 14
Page 15
Stockholders’ Equity
P
67.
Assume common stock is the only class of stock outstanding in the Manley Corporation.
Total stockholders' equity divided by the number of common stock shares outstanding is
called
a.
book value per share.
b.
par value per share.
c.
stated value per share.
d.
market value per share.
*68.
Dividends are not paid on
a.
noncumulative preferred stock.
b.
nonparticipating preferred stock.
c.
treasury common stock.
d.
Dividends are paid on all of these.
*69.
Noncumulative preferred dividends in arrears
a.
are not paid or disclosed.
b.
must be paid before any other cash dividends can be distributed.
c.
are disclosed as a liability until paid.
d.
are paid to preferred stockholders if sufficient funds remain after payment of the
current preferred dividend.
*70.
How should cumulative preferred dividends in arrears be shown in a corporation's
statement of financial position?
a.
Note disclosure
b.
Increase in stockholders' equity
c.
Increase in current liabilities
d.
Increase in current liabilities for the amount expected to be declared within the year or
operating cycle, and increase in long-term liabilities for the balance
Multiple Choice Answers—
Conceptual
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
21.
c
29.
d
37.
d
45.
b
53.
b
61.
b
*69.
a
22.
b
30.
b
38.
c
46.
c
54.
b
62.
c
*70.
a
23.
a
31.
a
39.
a
47.
c
55.
b
63.
b
24.
b
32.
b
40.
a
48.
b
56.
b
64.
a
25.
c
33.
a
41.
b
49.
c
57.
b
65.
b
26.
c
34.
d
42.
c
50.
c
58.
a
66.
c
27.
d
35.
b
43.
c
51.
a
59.
a
67.
a
28.
d
36.
a
44.
b
52.
a
60.
b
*68.
c
15 - 15
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