1. A fully depreciated asset
a. must be removed from the books
b. should continue to be depreciated until it is disposed of.
c. may remain on the books but is no longer depreciated.
d. may remain on the books and is then recorded as a gain on the income statement.
2 the accumulated depreciation account is:
a. an asset account because it reflects the asset value accumulated for replacement.
b. an equity account because it reflects the portion of the asset(s) that the owner(s) of the business can claim.
c. a liability account since it shows the obligation the company has to replace the assets.
d. an expense account since it shows the asset value used up
e. none of the above
3.A capital expenditure would appear on the a. income statement under operating expenses
b. balance sheet under plant assets
c. balance sheet under current assets
d. income statement under other expenses
4. The par value of stock is a. the same as its market value
b. always greater than its market value
c. required for every stock issued
d. the value assigned by the corporation which defines legal capital
e. the highest value the stock can have
5. if a corporation issues no-par stock instead of par value stock a. total stockholder will be greater.
b. total contributed capital will be greater but not the total stockholder equity.
c. total legal capital will be greater.
d. total legal capital will be lower.
e. total stockholder equity will be lower
6. An increase in retained earnings during the period can be the result of a. net income
b. cash dividends
c. sales of common stock
d. stock splits
e. treasury stock purchases
7. If a corporation issued 100,000 shares of $1 par value in exchange for land with a current value of $800,000, the journal entry for the transaction would include which of the following a. credit to land for $800,000
b. debit to common stock for $100,000
c. credit to common stock for $800,000
d. credit to additional paid in capital for $700,000
e. debit to land for $100,000
8. A cash dividend would have which of the following effects on the corporation declaring it? a. Total stockholder equity decreases.
b. Total stockholder equity increases.
c. Paid-in-capital increases, but total stockholder equity remains the same.
d. Paid-in-capital decreases, but total stockholder equity remains the same.
e. Stockholder equity remains the same.
9. Heston Inc. has 1,000,000 share of $1 par value common stock and 20,000 share of $100 par value 7% preferred stock. If Heston board of directors releases $1,000,000 for dividends to the shareholders, how much will each common share receive? a. $.86
b. $.93
c. $7
d. $1
e. $8.60
10. A stock split would have which of the following effects on the corporation issuing it? a. Total stockholder equity decreases.
b. Total stockholder equity increases.
c. Paid-in-capital increases, but total stockholder equity remains the same.
d. Paid-in-capital decreases, but total stockholder equity remains the same.
e. Stockholder equity remains unchanged.
11. ABC Corporation issued a 5% stock dividend that involved issuing 10,000 shares of $1 par value common stock when the market value of the stock was $25 per share. The journal entry for the transaction would include a. debiting cash for $10,000
b. crediting retained earnings for $10,000
c. debiting retained earnings for $250,000
d. crediting retained earnings for $250,000
e. crediting common stock for $250,000
12. Retained earnings can best be described as a. cash receipts minus expenses after adjustments
b. net income minus expenses after adjustments
c. net income plus dividends
d. undistributed profits
e. net income minus cash disbursements
13. A feature common to both stock dividends and stock splits is: a. a reduction in total stockholders' equity.
b. a reduction in the book value per share amount.
c. a reduction in retained earnings .
d. inclusion as financing activities on the cash flow statement.
e. they are both distributions from treasury stock held.
14. The declaration of a small stock dividend a. increases the ownership of each shareholder.
b. will cause a decrease in retained earnings equal to the par value of the shares issued.
c. is a warning that the corporation has cash flow problems.
d. is accounted for in the same manner as a stock split.
e. will cause a decrease in retained earnings equal to the fair market value of the shares issued.
15. The stock dividends declared account is classified in which of the following catagories?
a. asset
b. liability
c. stockholder equity
d. revenue
e. expense