1._______ The net effect of a stock dividend is that Retained Earnings decreases
ID: 2501006 • Letter: 1
Question
1._______ The net effect of a stock dividend is that Retained Earnings decreases, and… a. cash decreases b. Dividends Payable increases c. Paid in Capital increases d. None of these
2._______ Johnson Company issued an 8% cumulative preferred stock with $100 par. If the preferred stockholders received no dividend in year one, but received a dividend in year 2, the amount of the dividend per share would be: a. $4.00 per share b. $8.00 per share c. $16 per share d. unknown
3._______ The right to maintain your current ownership percentage when new common shares are about to be issued is called the a. voting right b. mutual agency c. liquidation right d. pre emptive right
4._______ The declaration of a cash dividend has what effect? A. common stock increases and cash decreases b. retained earnings decreases and dividends payable increases c. dividends payable decreases and cash decreases d. retained earnings decreases and paid in capital increases.
5._______ Investment A results in cash flows of $1,000 in year 1 and $2,000 in year 2. Investment B results in cash flows of $1,000 per year for three years. Which statement is true? A. Investment A is an annuity b. investment B is an annuity c. both investments are annuities d. neither investment is an annuity
6._______ Bob invests $4,000 in an account that earns 6% per year. How much will Bob’s investment grow to in 3 years? A. $4,494 b. $4,764 c. $3,358
Explanation / Answer
1._______ The net effect of a stock dividend is that Retained Earnings decreases, and… a. cash decreases b. Dividends Payable increases c. Paid in Capital increases d. None of these
Answer
c. Paid in Capital increases
2._______ Johnson Company issued an 8% cumulative preferred stock with $100 par. If the preferred stockholders received no dividend in year one, but received a dividend in year 2, the amount of the dividend per share would be: a. $4.00 per share b. $8.00 per share c. $16 per share d. unknown
Answer unknown. Because do not know the number of outstanding shares
3._______ The right to maintain your current ownership percentage when new common shares are about to be issued is called the a. voting right b. mutual agency c. liquidation right d. pre emptive right
Answer
. D.pre emptive right. This allows the shareholder’s to maintain their current ownership
4._______ The declaration of a cash dividend has what effect? A. common stock increases and cash decreases b. retained earnings decreases and dividends payable increases c. dividends payable decreases and cash decreases d. retained earnings decreases and paid in capital increases.
Answer b. retained earnings decreases and dividends payable increases
Declaration of cash dividend decrease retained earnings by the amount of cash dividend.
5._______ Investment A results in cash flows of $1,000 in year 1 and $2,000 in year 2. Investment B results in cash flows of $1,000 per year for three years. Which statement is true? A. Investment A is an annuity b. investment B is an annuity c. both investments are annuities d. neither investment is an annuity
Answer
c.both investments are annuities
6._______ Bob invests $4,000 in an account that earns 6% per year. How much will Bob’s investment grow to in 3 years? A. $4,494 b. $4,764 c. $3,358
Answer is option B. $4,764
FV = PV*(1+i)^n
FV = 4,000*(1.06)^3
FV = $4,764
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