BUS103: Introduction to Financial Accounting

True-false

Indicate whether each of the following statements is true or false

1. The retained earnings balance of a corporation is part of its paid-in capital.

2. The purchase of treasury stock does not affect stockholders' equity.

3. Dividends are expenses since they decrease stockholders' equity.

4. A stock dividend reduces the retained earnings balance and permanently capitalizes the reduced portion of the retained earnings.

5. A retained earnings appropriation reduces the total stockholders' equity shown on the balance sheet.

6. Heavy frost damage suffered by a Florida citrus grower's orange trees would probably be reported as an extraordinary item.

Multiple-choice

Select the best answer for each of the following questions.

1. Which of the following is not included in paid-in capital?

2. Bevins Company issued 10,000 shares of USD 20 par value common stock at USD 24 per share. Bevins reacquired 1,000 shares of its own stock at a cost of USD 30 per share. The entry to record the reacquisition is:

a.

b.

c.

d.

3. If the company reissues 500 shares of the treasury stock in (2) for USD 36 per share, the entry is:

a.

b.

c.

d.

4. Treasury stock should be shown on the balance sheet as a:

5. An individual stockholder is entitled to receive any dividends declared on stock owned, provided the stock is held on the:

6. ABC Corporation declared the regular quarterly dividend of USD 2 per share. ABC had issued 12,000 shares and subsequently reacquired 2,000 shares as treasury stock. What would be the total amount of the dividend?

7. Which item is not reported as a separate line item below income from continuing operations, net of tax effects, in the income statement?