Multiple Choice Answers

Question 1 of 20
Which of the following is the journal entry to record the declaration of a stock dividend?
A. Debit Common Stock Dividend Distributable (number of shares × par value common stock); credit Common Stock (same)
B. Debit Common Stock Dividend Distributable (number of shares × market value common stock); credit Common Stock (same)
C. Debit Retained Earnings (market value × number of shares); credit Common Stock Dividend Distributable (number of shares × par value); credit Paid-In Capital in Excess of Par Stock Dividend (market value – par value) × number of shares
D. Debit Common Stock (number of shares × par value); credit Cash
Question 2 of 20
Before a three-for-one stock split, the shares outstanding were 5,000 shares at $12 par. After the split, what was the par and number of shares?
A. 15,000 shares at $12 per share
B. 20,000 shares at $6 per share
C. 15,000 shares at $4 per share
D. 5,000 shares at $48 per share
Question 3 of 20
Providing services to a credit customer was recorded with a debit to Cash and a credit to Retained Earnings. This error would cause
A. the period’s net income to be understated.
B. the period’s end liabilities to be understated.
C. the total period’s end stockholders’ equity to be understated.
D. the period’s net income to be overstated.
Question 4 of 20
The journal entry to record the issuance of a stock dividend is which of the following?
A. Debit Common Stock Dividend Distributable (number of shares × par value common stock); credit Common Stock (same)
B. Debit Common Stock Dividends Distributable (number of shares × market value common stock); credit Common Stock (same)
C. Debit Retained Earnings (market value × number of shares); credit Common Stock Dividends Distributable (number of shares × par value); credit Paid-In Capital in Excess of Par-Stock Dividend
D. Debit Common Stock Dividend Distributable (number of shares × par value); credit Cash
Question 5 of 20
Treasury stock was purchased and recorded as an asset. This error would cause
A. the period’s end assets to be understated.
B. the period’s end liabilities to be overstated.
C. the period’s end stockholders’ equity to be overstated.
D. None of the above
Question 6 of 20
Treasury stock is
A. stock that’s issued in a stock dividend.
B. stock that has been reacquired by the corporation.
C. previously issued stock that has been canceled.
D. unissued but authorized stock.
Question 7 of 20
A retained earnings appropriation is a restriction of retained earnings by
A. accountants.
B. senior management.
C. stockholders.
D. the board of directors.
Question 8 of 20
Which of the following would not be shown on the statement of retained earnings?
A. Purchase of treasury stock
B. Appropriations for plant expansion
C. Declaration of a stock dividend
D. Declaration of a cash dividend
Question 9 of 20
A stock split
A. causes a decrease in the number of shares outstanding.
B. increases the par or stated value in proportion.
C. reduces retained earnings.
D. None of the above
Question 10 of 20
At the end of the accounting cycle, net income will be closed into
A. Treasury Stock.
B. Paid-In Capital.
C. Cash.
D. Retained Earnings.
Question 11 of 20
In the dividend process, the liability Dividend Payable is recognized on the date of
A. declaration.
B. record.
C. payment.
D. stock issue.
Question 12 of 20
Rick’s Internet Corporation’s balance in Retained Earnings is $30,000. The board of directors directs that $15,000 be appropriated for future business expansion. This will cause total retained earnings to
A. remain at $30,000.
B. increase by $15,000.
C. decrease by $15,000.
D. increase or decrease $5,000, as determined by the board.
Question 13 of 20
Farm and Supply reissued 100 shares of treasury stock at $20 that had been reacquired for $15 per share. What is the entry?
A. Debit Cash $2,000; credit Treasury Stock—Common $1,500; credit Paid-In Capital from Treasury Stock $500
B. Debit Cash $2,000; credit Treasury Stock—Common $2,000
C. Debit Cash $1,500; credit Paid-In Capital from Treasury Stock $500, credit Treasury Stock—Common $2,000
D. None of the above
Question 14 of 20
The entry to record the declaration of a stock dividend would include
A. a credit to Retained Earnings.
B. a credit to Cash.
C. a credit to Common Stock.
D. None of the above
Question 15 of 20
When treasury stock is reissued for more than cost,
A. debit Cash and credit Treasury Stock and Paid-In Capital from Treasury Stock.
B. debit Cash and credit Common Stock and Paid-In Capital from Common Stock.
C. debit Cash and credit Treasury Stock.
D. debit Cash and credit Treasury Stock and Retained Earnings.
Question 16 of 20
Declaration of a cash dividend was recorded by debiting Operations Expense and crediting Cash. This error would cause
A. the period’s end assets to be overstated.
B. the period’s end liabilities to be overstated.
C. the period’s end stockholders’ equity to be understated.
D. None of the above
Question 17 of 20
Treasury stock was sold above cost, and the excess was credited to Gain on Sale. This error would cause the period’s
A. end assets to be overstated.
B. end liabilities to be overstated.
C. end stockholders’ equity to be overstated.
D. net income to be overstated.
Question 18 of 20
Barkley’s Resort had 2,000 shares of $20 par value common stock outstanding. On June 1, Barkley’s purchased 200 shares of treasury stock at $21 per share and later reissued them for $22 per share. Which amount of profit from the reissuance will be reported on the income statement?
A. $400
B. $200
C. $100
D. $0
Question 19 of 20
Cody’s Western Wear has 2,000 shares of $10 par value common stock outstanding. During the current year, the company distributed a 10% stock dividend. The market value of the stock at that time was $16 per share. Cody’s total stockholders’ equity should increase or decrease by
A. $0.
B. $1,200.
C. $2,000.
D. ($3,200).
Question 20 of 20
The entry to record the distribution of the stock dividend would include
A. a credit to Common Stock.
B. a debit to Common Stock Distributable.
C. Both a and b
D. None of the above