Strayer ACC 206 Accounting Principles II Week 6 Quiz (71 Questions)
TRUE-FALSE STATEMENTS
1. Dividends may be declared and paid in cash or stock.
True
False
2. Cash dividends are not a liability of the corporation until they are declared by the board of directors.
True
False
3. The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.
True
False
4. A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.
True
False
5. A 3 for 1 common stock split will increase total stockholders’ equity but reduce the par or stated value per share of common stock.
True
False
6. Retained earnings represents the amount of cash available for dividends.
True
False
7. Net income of a corporation should be closed to retained earnings and net losses should be closed to paid-in capital accounts.
True
False
8. A debit balance in the Retained Earnings account is identified as a deficit.
True
False
9. A correction in income of a prior period involves either a debit or credit to the Retained Earnings account.
True
False
10. Prior period adjustments to income are reported in the current year’s income statement.
True
False
11. Retained earnings that are restricted are unavailable for dividends.
True
False
12. Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends.
True
False
13. A retained earnings statement shows the same information as a corporation income statement.
True
False
14. A detailed stockholders’ equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.
True
False
15. Common Stock Dividends Distributable is shown within the Paid-in Capital subdivision of the stockholders’ equity section of the balance sheet.
True
False
16. Return on common stockholders’ equity is computed by dividing net income by ending stockholders’ equity.
True
False
17. Many companies prepare a stockholders’ equity statement instead of presenting a detailed stockholders’ equity section in the balance sheet.
True
False
18. A major difference among corporations, proprietorships, and partnerships is that a corporation’s income statement reports income tax expense.
True
False
19. A corporation incurs income tax expense only if it pays dividends to stockholders.
True
False
20. Income tax expense usually appears as a separate section on a corporation income statement.
True
False
21. Earnings per share is calculated by dividing net income by the weighted average number of shares of preferred stock and common stock outstanding.
True
False
22. Preferred dividends paid are added back to net income in calculating earnings per share for common stockholders.
True
False
23. Earnings per share indicates the net income earned by each share of outstanding common stock.
True
False
24. Earnings per share is reported for both preferred and common stock.
True
False
25. Most companies are required to report earnings per share on the face of the income statement.
True
False
Additional True-False Questions
26. A dividend based on paid-in capital is termed a liquidating dividend.
True
False
27. Common Stock Dividends Distributable is reported as additional paid-in capital in the stockholders’ equity section.
True
False
28. A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.
True
False
29. Income tax expense and the related liability for income taxes payable are recorded when taxes are paid.
True
False
30. Earnings per share is reported only for common stock.
True
False
MULTIPLECHOICE QUESTIONS
31. Each of the following decreases retained earnings except a
a. cash dividend.
b. liquidating dividend.
c. stock dividend.
d. All of these decrease retained earnings.
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