A03 Online Exam 3_03 Score 85% (Incorrect answers marked)

Question-1
When treasury stock is reissued for more than cost __________.

    A. debit Cash; credit Treasury Stock and Paid-in Capital from Treasury Stock
    B. debit Cash; credit Common Stock and Paid-in Capital from Common Stock
    C. debit Cash; credit Treasury Stock
    D. debit Cash; credit Treasury Stock and Retained Earnings

Question-2
To record the purchase of treasury stock, __________.
    A. debit Treasury Stock-Common (par value.; credit Cash (same.
    B. debit Treasury Stock-Common (purchase price.; credit Cash (same.
    C. debit Treasury Stock-Common (par value.; debit any difference to Paid-in Capital; credit Cash (purchase price.
    D. none of the above

Question-3
Treasury stock was sold above cost and the excess was credited to Gain on Sale. This error would cause __________.

    A. the period's end assets to be overstated
    B. the period's end liabilities to be overstated
    C. the total period's end stockholders' equity to be overstated
    D. the period's net income to be overstated

Question-4
When O'Rourke Corporation sells treasury stock for more than the original cost, __________.

    A. stockholders' equity increases
    B. paid-in capital increases
    C. retained earnings may increase
    D. retained earnings may decrease

Question-5
A retained earnings appropriation is a restriction of retained earnings by __________.

    A. accountants
    B. senior management
    C. stockholders
    D. the board of directors

Question-6
ABC Corporation offered a four-for-one stock split. The number of outstanding shares before the split was 15,000 and the par value was $20 per share. After the split, what was the par value and number of shares?

    A. 3,750 shares at $80 per share
    B. 60,000 shares at $80 per share
    C. 60,000 shares at $5 per share
    D. 3,750 shares at $5 per share

Question-7
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-8
Typically, the only credit to the retained earnings account for a corporation is __________.

    A. the initial investment of stockholders
    B. net income of the period
    C. net loss of the period
    D. any withdrawals by the owners

Question-9
The journal entry to record the issuance of a stock dividend is to __________.

    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
(Answer of question-9 is incorrect)
Question-10
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
In the dividend process, the liability Dividend Payable is recognized on the __________.

    A. date of declaration
    B. date of record
    C. date of payment
    D. date of stock issue

Question-12
A stock-split journal entry would include a __________.

    A. debit to Retained Earnings and a credit to Common Stock
    B. debit to Common Stock and a credit to Cash
    C. debit to Common Stock Dividend Distributable and a credit Common Stock
    D. memorandum notation only

Question-13
A distribution to stockholders in the form of cash is called a __________.

    A. stock dividend
    B. stock split
    C. stock conversion
    D. cash dividend

Question-14
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  (This is incorrect)
    D. none of the above

Question-15
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. What amount of profit from the re-issuance will be reported on the income statement?

    A. $400
    B. $200
    C. $100
    D. $0

Question-16
Appropriations to retained earnings are __________.

    A. recorded as an contra-asset
    B. disclosed in the notes to the financial statements
    C. recorded as a contra-liability
    D. a contra-stockholders' equity

Question-17
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; Paid-In Capital from Treasury Stock $500, credit Treasury Stock-Common $2,000
    D. none of the above

Question-18
The date of record for cash dividends is __________.

    A. the date the board of directors pays a dividend
    B. the date established by the board of directors that determines who will receive dividends
    C. the date that creates a liability for the company
    D. none of the above

Question-19
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-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   (This is incorrect)
    C. both A and B
    D. none of the above


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