31.Dividends in arrears on cumulative preferred stock
a.increase liabilities.
b.decrease retained earnings.
c.have no effect on the balance sheet but are disclosed in the footnotes.
d.increase the debt/equity ratio.
32.Which one of the following events decreases the current ratio?
a.A decrease in the number of common shares outstanding
b.Sale of treasury stock for more than its cost
c.Sale of treasury stock for less than its cost
d.Purchase of treasury stock
33.On January 1, 2010, Susann, Inc. declared a 15% stock dividend on its common stock when the market value of the common stock was $20 per share. Shareholders' equity before the stock dividend was declared consisted of:
Common stock, $10 par value, authorized 40,000 shares;
|
|
issued and outstanding 5,000 shares
|
$ 50,000
|
Additional paid-in capital on common stock
|
200,000
|
Retained earnings
|
60,000
|
Total shareholders' equity
|
$310,000
|
What happened to retained earnings as a result of the stock dividend declaration?
a.$6,000 decrease
b. $7,500 decrease
c. $15,000 decrease
d. No change
34.Dividends are not paid on
a. noncumulative preferred stock.
b. nonparticipating preferred stock.
c. treasury common stock.
outstanding common shares.
35.If a company sells its treasury stock for more than it cost and records a gain on the income statement, then
a. income and shareholders' equity are overstated.
b. only income is overstated.
c. only shareholders' equity is overstated.
d. the income statement and balance sheet are properly stated.
36.What effect will the acquisition of treasury stock have on shareholders' equity?
a. No effect
b. Increase
c. Depends on whether it cost more or less than the par value of the stock
d. Decrease
37.Which one of the following events increases the debt/equity ratio?
a.Purchase of treasury stock
b.Sale of treasury stock for more than its cost
c.Sale of treasury stock for less than its cost
d.Payment of cash dividends that were previously declared
38.A company declared cash dividends in 2009, and paid the dividends in 2010. The payment in 2010
a. decreases the debt/equity ratio.
b. increases the number of shares of stock outstanding.
c. decreases shareholders’ equity.
d.decreases net income.
39.The declaration of cash dividends
a. increases total expenses.
b. decreases current liabilities.
c. decreases earnings per share.
d.increases the debt/equity ratio.
40.The payment of previously declared cash dividends
a. increases the debt/equity ratio.
b. increases current liabilities.
c. increases earnings per share.
d.decreases total liabilities.