Question 15 (1 point) The resale of treasury stock for an amount greater than it

Question

Question 15 (1 point)

The resale of treasury stock for an amount greater than its cost:

Question 15 options:

increases total assets and decreases total stockholders' equity.

decreases total assets and increases total stockholders' equity.

increases total assets and increases total stockholders' equity.

increases net income.

Save

Question 16 (1 point)

Each of the following decreases retained earnings except:

Question 16 options:

large stock dividends.

small stock dividends.

stock splits.

cash dividends.

Save

Question 17 (1 point)

Treasury stock is reported in the balance sheet as a deduction from:

Question 17 options:

retained earnings.

paid-in capital and retained earnings.

capital stock.

additional paid-in capital.

Save

Question 18 (1 point)

Watkins, Inc. paid $48,000 to buy back 9,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a:

Question 18 options:

credit to Paid-in Capital from Treasury Stock for $6,000.

credit to Common Stock for $6,000.

debit to Retained Earnings for $48,000.

debit to Paid-in Capital from Treasury Stock for $45,000.

Save

Question 19 (1 point)

Restrictions of retained earnings:

Question 19 options:

do not change total stockholders' equity.

provide insurance coverage for contingencies.

are reported as expenses on the income statement.

are reported on the balance sheet as liabilities.

Save

Question 20 (1 point)

Ownership of common stock ordinarily carries the right to:

Question 20 options:

establish a drawing account.

vote on corporate actions that require stockholder approval.

declare dividends.

enter into contracts for the corporation.

Save

Question 21 (1 point)

A corporation is formed when:

Question 21 options:

it is granted by-laws by the federal government.

it borrows money.

it receives a charter from its president.

None of the other choices are correct.

Save

Question 22 (1 point)

Which of the following may either increase or decrease retained earnings?

Question 22 options:

Stock dividends.

Net income.

Disposals of treasury stock.

Prior period adjustments.

Save

Question 23 (1 point)

Common Stock Dividends Distributable is reported in the balance sheet:

Question 23 options:

in paid-in capital as an addition to common stock issued.

as a liability.

as an addition to retained earnings.

as an asset.

Save

Question 24 (1 point)

Under the equity method of accounting, the investment in common stock is initially recorded at cost and the investment account is subsequently:

Question 24 options:

credited for cash dividends received.

debited for cash dividends received and credited for the investor's share of investee net income.

credited for cash dividends received and debited for the investor's share of investee net income.

debited for the investor's share of investee net income.

Save

Question 25 (1 point)

The preparation of consolidated financial statements are not useful to:

Question 25 options:

only the parent and the subsidiary company.

the parent company.

creditors of the company.

the subsidiary company.

increases total assets and decreases total stockholders' equity.

decreases total assets and increases total stockholders' equity.

increases total assets and increases total stockholders' equity.

increases net income.

Explanation / Answer

Answers of all questions:

Question 15

The resale of treasury stock for an amount greater than its cost:

increases total assets and increases total stockholders' equity.

Question 16

Each of the following decreases retained earnings except:

Stock split

Since Retained Earnings = Beginning Balance + Net Income – Dividends i.e. they are directly affected by dividends

Question 17

Treasury stock is reported in the balance sheet as a deduction from:

Paid- in capital and retained earnings

Question 18

Watkins, Inc. paid $48,000 to buy back 9,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a:

Credit to Common Stock for $6,000.

Question 19

Restrictions of retained earnings:

Are reported on the balance sheet as liabilities.

Question 20

Ownership of common stock ordinarily carries the right to:

Vote on corporate actions that require stockholder approval.

Question 21

A corporation is formed when:

it is granted by-laws by the federal government.

Question 22

Which of the following may either increase or decrease retained earnings?

Stock dividends

Since Retained Earnings = Beginning Balance + Net Income – Dividends i.e. they are directly affected by dividends

Question 23

Common Stock Dividends Distributable is reported in the balance sheet:

in paid-in capital as an addition to common stock issued.

They are shown under head Shareholder’s equity in Balance Sheet.

Question 24

Under the equity method of accounting, the investment in common stock is initially recorded at cost and the investment account is subsequently:

Credited for cash dividends received

Question 25

The preparation of consolidated financial statements are not useful to:

Creditors of the company

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---