Multiple Choice Question 142 no entry is required. Dividends Payable is debited.
ID: 2601421 • Letter: M
Question
Multiple Choice Question 142
no entry is required.
Dividends Payable is debited.
an entry may be required if it is a stock dividend.
a dividend becomes a current obligation.
Multiple Choice Question 155
exceed stockholders' dividend expectations.
increase the market price per share.
increase the marketability of the stock.
decrease the amount of capital in the corporation.
Multiple Choice Question 163
increase the total par value of the stock.
increase total paid-in capital.
have no effect on retained earnings.
have no effect on the par value per share of stock.
Multiple Choice Question 164
Which of the following statements is not true about a 2-for-1 stock split?
Par value per share is reduced to half of what it was before the split.
Total paid-in capital increases.
The market value of the stock will probably decrease.
A stockholder with 5 shares before the split owns 10 shares after the split.
Multiple Choice Question 168
due to contractual loan restrictions.
to keep the legal capital associated with paid-in capital intact.
if preferred dividends are in arrears.
to set aside cash for dividends.
Multiple Choice Question 170
communicate to readers a portion of retained earnings is unavailable for dividends.
increase total stockholders' equity.
decrease total stockholders' equity.
assure that a company has sufficient cash for a specific purpose.
Multiple Choice Question 187
capital stock and additional paid-in capital.
capital stock and treasury stock.
preferred stock and common stock.
paid-in capital and retained earnings.
no entry is required.
Explanation / Answer
Solution 142:
The date of record is the date at which the stockholders figuring in the stockholders’ ledger are entitled to the dividend. No journal entry is required.
Solution 155:
A firm with adequate retained earnings but insufficient liquidity may elect to issue “stock dividends” by a pro rate distribution of additional shares of the firm’s own stock to its stockholders. The transaction is made by a capitalization of retained earnings resulting in a reduction of retained earnings and an increase in some contributed capital accounts. No corporate assets are distributed; the value of the total stockholder’s equity remains unchanged as well as each stockholder’s percentage ownership in the firm.
Therefore stock dividen is issue to increase the marketability of company stock as addtional shares comes in the market.
Solution 163:
A stock split is a decision by the company's board to increase the number of outstanding shares.
If it decides to split the stock, instead of one share of a particular face value, the share holder will have two shares of the same yet equally divided face value. The stock can be even be split in a 3-for-1 or 5-for-1 manner. By stock split, only face value of share is changed and there is no effect on paid up capital and retained earnings.
Therefore 3rd choice is correct "Stock split have no effect on retained earnings"
Solution 164:
stock split, generally market value of share decreases. for 2 on 1 stock split, Par value per share is reduced to half of what it was before the split and it will not effect paid up capital and retained earnings.
Therefore choice 2 is correct, It is not true, due to stock split paid up capital increases.
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