Chapter 10
The two main categories of stockholders' equity are
A. assets and liabilities.
B. retained earnings and paid-in capital.
C. common stock and preferred stock.
D. retained earnings and common stock.
B. retained earnings and paid-in capital.
The basic form of capital stock is
A. the corporate charter.
B. a share of common stock.
C. a share of preferred stock.
D. par value stock.
B. a share of common stock.
The statement of cash flows is designed for all of the following purposes except
A. to list all revenues and expenses.
B. to determine a company's ability to pay dividends and interest.
C. to provide information about cash receipts and cash payments during a period.
D. to predict future cash flows.
A. to list all revenues and expenses.
On an indirect method statement of cash flows, a gain on the sale of plant assets is
A. deducted from net income in the operating activities section.
B. added to net income in the operating activities section.
C. ignored, because the gain did not generate any cash.
D. reported in the investing activities section.
A. deducted from net income in the operating activities section.
What is the journal entry for the date of no record for a cash dividend?
No journal entry
Which of the following is not considered to be an advantage of a corporation?
A. Continuous life
B. Ability to raise more capital than a partnership or proprietorship
C. Limited liability of stockholders for the corporation's debts
D. Double taxation
D. Double taxation
Preferred stock is least likely to have which of the following characteristics?
A. Preference as to assets on liquidation of the corporation
B. The right of the holder to convert the shares to common stock
C. Preference as to dividends
D. Preference as to voting
D. Preference as to voting
On the statement of cash flows, increases and decreases in long-term assets resulting from cash transactions are reported as:
A. operating activities.
B. noncash investing and financing activities.
C. financing activities.
D. investing activities.
D. investing activities.
If the indirect method is used to calculate net cash provided by operating activities, a decrease in accounts receivable is
A. ignored since it does not affect net income.
B. added to net income.
C. subtracted from net income.
D. ignored since it does not affect expenses.
B. added to net income.
What does the journal entry look like for no-par common stock?
DR CASH
CR CS
If a corporation issues 1,200 shares of $ 1.20 par value common stock for $ 7,200, the journal entry would include a credit to
A. Paid-in Capital in Excess of Par - Common for $ 7,200.
B. Common Stock for $ 7,200.
C. Retained Earnings for $ 1,440.
D. Common Stock for $ 1,440.
D. Common Stock for $ 1,440.
Which of the following classifications represents the most shares of common stock?
A. Unissued shares
B. Authorized shares
C. Outstanding shares
D. Treasury shares
E. Issued shares
B. Authorized shares
Cash received from the issuance of common stock is reported on a statement of cash flows under
A. operating activities.
B. noncash investing and financing activities.
C. investing activities.
D. financing activities
D. financing activities
On an indirect method statement of cash flows, an increase in a prepaid insurance is
A. included in payments to suppliers.
B. added to increases in current assets.
C. deducted from net income.
D. added to net income.
C. deducted from net income.
Photo Craze Camera Co. sold equipment with a cost of $ 21,000 and accumulated depreciation of $9,000 for an amount that resulted in a gain of $ 3,000. What amount should Photo Craze report on the statement of cash flows as "proceeds from sale of plant assets"?
A. $ 12,000
B. $ 15,000
C. $ 9,000
D. Some other amount
B. $ 15,000
Seaside Corporation purchased 3,200 shares of its own $ 1.50 par value common stock for $ 130,000. As a result of this transaction, the company's stockholders' equity
A. increased by $ 125,200.
B. increased by $ 4,800.
C. decreased by $ 130,000.
D. increased by $ 130,000.
C. decreased by $ 130,000.
A stock split
A. increases assets and decreases stockholders' equity.
B. increases assets and stockholders' equity.
C. has no effect on total stockholders' equity.
D. decreases assets and increases stockholders' equity.
C. has no effect on total stockholders' equity.
Paying off bonds payable is reported on the statement of cash flows under
A. operating activities.
B. financing activities.
C. noncash investing and financing activities.
D. investing activities.
B. financing activities.
In the current year, PULR Company sold land for $ 81,000 cash, purchased a delivery van for $ 25,000 cash, and issued common stock for $ 96,000 cash. The net cash provided by investing activities is
A. $ 177,000.
B. $ 152,000.
C. $ 56,000.
D. $ 202,000.
C. $ 56,000.
In 2018, Gala Company repurchased its own stock at a cost of $ 58,000. During the year, the company purchased land with cash for $ 115,000 and issued bonds payable for $ 325,000. Net cash provided by financing activities for the year would have been
A. $ 383,000.
B. $ 152,000.
C. $ 498,000.
D. $ 267,000.
D. $ 267,000.
When treasury stock is sold for less than its cost, the entry should include a debit to
A. Gain on Sale of Treasury Stock.
B. Loss on Sale of Treasury Stock.
C. Paid-in Capital in Excess of Par.
D. Retained Earnings.
D. Retained Earnings.
How does the declaration of a cash dividend affect a company's assets, liabilities, and equity?
A. It results in an increase to liabilities and a decrease to assets, while stockholders' equity remains the same.
B. It results in an increase to liabilities and a decrease to stockholders' equity, while assets remain the same.
C. It results in an increase to stockholders' equity and a decrease to assets, while liabilities remain the same.
D. It results in an increase to assets and a decrease to liabilities, while stockholders' equity remains the same.
B. It results in an increase to liabilities and a decrease to stockholders' equity, while assets remain the same.
On the statement of cash flows, which of the following items is classified as a financing activity?
A. Purchasing investments with cash
B. Loaning money with a short-term note receivable
C. Borrowing cash by signing a long-term note
D. Acquiring long-term assets with cash
C. Borrowing cash by signing a long-term note
Which of the following transactions does not affect cash during a period?
A. A write-off of an uncollectible account
B. Issuing common stock
C. Paying an accounts payable
D. A purchase of a building with cash
A. A write-off of an uncollectible account
What does the journal entry look like for selling treasury stock for less than its original price?
DR CASH
DR RE
CR TS