Does a stock dividend increase an investor's personal wealth immediately?

Does a stock dividend increase an investor's personal wealth immediately?  a. No, because the stock price falls when a stock dividend is issued. b....

When treasury stock is purchased with cash, what is the impact on the balance sheet equation?

When treasury stock is purchased with cash, what is the impact on the balance sheet equation? a. No change: the reduction of the asset cash is offset...

Which statement regarding dividends is false?

Which statement regarding dividends is false?  a. Dividends represent a sharing of corporate profits with owners. b. Both stock and cash dividends...

A company has net income $225,000 and declares and pays dividends in the amount of $75,000. What is the net impact on retained earnings?

A company has net income $225,000 and declares and pays dividends in the amount of $75,000. What is the net impact on retained earnings?  a....

A journal entry is not recorded on what date?

A journal entry is not recorded on what date?  a. date of declaration b. date of record c. date of payment d. A journal entry is recorded on...

A company issues 100,000 shares of common stock with a par value of $1 per share. The stock sold for $20 per share. By what amount does stockholders' equity increase?

A company issues 100,000 shares of common stock with a par value of $1 per share. The stock sold for $20 per share. By what amount does stockholders'...

Which order best describes the largest number of shares to the smallest number of shares?

Which order best describes the largest number of shares to the smallest number of shares?  a. shares authorized, shares issued, shares outstanding b....

Which of the following statements about stock dividends is true?

Which of the following statements about stock dividends is true?  a. Stock dividends are reported on the statement of cash flow. b. Stock dividends...

Which statement regarding treasury stock is false?

Which statement regarding treasury stock is false?  a. Treasury stock is considered to be issued but not outstanding. b. Treasury stock has no...

Katz Corporation has issued 400,000 shares of common stock and holds 20,000 shares in treasury. The charter authorized the issuance of 500,000 shares. The company has declared and paid a dividend of $1 per share. What is the total amount of the dividend?

Katz Corporation has issued 400,000 shares of common stock and holds 20,000 shares in treasury. The charter authorized the issuance of 500,000 shares....

On March 31, a corporation issued a 2 for 1 stock split of its 100,000 shares of $0.01 par value common stock. As a result of the stock split:

On March 31, a corporation issued a 2 for 1 stock split of its 100,000 shares of $0.01 par value common stock. As a result of the stock split: A)...

The corporation issued a small stock dividend of 15 percent of its 120,000 outstanding shares of common stock. You own 1,000 shares of the common stock, prior to the stock dividend. As a result of the stock dividend:

The corporation issued a small stock dividend of 15 percent of its 120,000 outstanding shares of common stock. You own 1,000 shares of the common stock,...

On the date of declaration, which account is debited for the amount of the declared cash dividend?

On the date of declaration, which account is debited for the amount of the declared cash dividend? A) Retained Earnings B) Cash Dividend Expense C)...

Which of the following is TRUE about treasury stock?

Which of the following is TRUE about treasury stock? A) It is an asset. B) It receives cash dividends. C) It retains voting rights. D) It is a contra-equity...

A corporation reacquired 1,000 shares of its $0.01 par value common stock outstanding, paying $14 per share. Three months later, the 500 shares of the treasury stock was reissued for $16 per share. The journal entry to record the sale of the treasury stock will include:

A corporation reacquired 1,000 shares of its $0.01 par value common stock outstanding, paying $14 per share. Three months later, the 500 shares of the...

After a company's stock has been traded on established markets, additional sales of new stock are called:

After a company's stock has been traded on established markets, additional sales of new stock are called: A) seasoned new issues. B) treasury stock. C)...

A corporation sold 10,000 shares of $5 par value common stock for $40 per share. The journal entry to record the transaction will include:

A corporation sold 10,000 shares of $5 par value common stock for $40 per share. The journal entry to record the transaction will include: A) a credit...

What is the earnings per share?

Consider the following: Beginning number of outstanding shares of common stock - 1,100,000 Net income - $1,500,000 Ending number of outstanding shares...

A corporation's charter permits the corporation to issue 100,000 shares of $0.01 par value common stock. The corporation sold 50,000 shares and, later, reacquired 1,000 shares to hold as treasury stock. What is the number of shares outstanding?

A corporation's charter permits the corporation to issue 100,000 shares of $0.01 par value common stock. The corporation sold 50,000 shares and, later,...

Which of the following is a benefit of the corporate form of business?

Which of the following is a benefit of the corporate form of business? A) raising large amounts of capital is easier B) ownership interests are easily...

Ardent Inc had 1,000 shares of $100 par, 6% preferred stock outstanding, as well as 100,000 shares of $.01 par common stock On March 31, 1996, their year-end, the board of directors declared a dividend of $9,500. In the past, they have tried to maintain minimum dividend of $.1 per share on common stock.

Ardent Inc had 1,000 shares of $100 par, 6% preferred stock outstanding, as well as 100,000 shares of $.01 par common stock On March 31, 1996, their...

Ardent Inc had 1,000 shares of $100 par, 6% preferred stock outstanding, as well as 100,000 shares of $.01 par common stock On March 31, 1996, their year-end, the board of directors declared a dividend of $9,500. In the past, they have tried to maintain minimum dividend of $.1 per share on common stock. For the March 31 dividend, referred stockholders would receive a total of ________ and common stockholders a total of ________.

Ardent Inc had 1,000 shares of $100 par, 6% preferred stock outstanding, as well as 100,000 shares of $.01 par common stock On March 31, 1996, their...

A stock split, unlike a stock dividend,

A stock split, unlike a stock dividend, a. requires no journal entry b. does not change total stockholders' equity c. reduces the par value of the...

The dividend yield ratio is

The dividend yield ratio is  a. calculated by dividing dividends per share by market price per share b. calculated by dividing total cash dividends...

On December 31, 1995, the board of directors of Ardent Inc. issued a press release to the newspapers stating that the company panned to pay a dividend of $.12 per share on its common stock. The date of this announcement is known as the date of _______; the company must record a liability ______.

On December 31, 1995, the board of directors of Ardent Inc. issued a press release to the newspapers stating that the company panned to pay a dividend...

Cosmic Treats Co. purchased 40,000 shares of its own $1 par common stock on the open market for $600,000. Cosmic intends to hold the stock for employee bonuses. This stock would be carried on Cosmic's books in

Cosmic Treats Co. purchased 40,000 shares of its own $1 par common stock on the open market for $600,000. Cosmic intends to hold the stock for employee...

Quinn had one hundred shares of Compact common stock that she had purchased for $21 per share. She sold the shares to Randy for $28 per share. On Compact's books this would

Quinn had one hundred shares of Compact common stock that she had purchased for $21 per share. She sold the shares to Randy for $28 per share. On Compact's...

Compact Corporation as 50,000,000 shares of common stock, par value $.01, authorized, and 16,697,000 shares issued and outstanding. Its total paid in capital is $199,623,000. The average price received by Compact for a share of its stock was

Compact Corporation as 50,000,000 shares of common stock, par value $.01, authorized, and 16,697,000 shares issued and outstanding. Its total paid in...

Compact Corporation as 50,000,000 shares of common stock, par value $.01, authorized, and 16,697,000 shares issued and outstanding. Its total paid in capital is $199,623,000. If Compact rounds all dollar amounts on its financial statements to the nearest thousandth, the dollar amount reported as common stock on its balance sheet would be

Compact Corporation as 50,000,000 shares of common stock, par value $.01, authorized, and 16,697,000 shares issued and outstanding. Its total paid in...

Outstanding shares of stock are those which

Outstanding shares of stock are those which  a. have been issued to investors b. have been issued and have not been bought back by the company c....

In order to create a corporation, it is necessary to apply to

In order to create a corporation, it is necessary to apply to  a. the federal government b. the appropriate office in the state in which the...

A stockholder of a corporation is

A stockholder of a corporation is  a. one of the owners of the corporation b. a creditor of the corporation c. both an owner and a creditor of...

Transactions involving capital stock are reported as cash flows from investing activities in the statement of cash flows.

Transactions involving capital stock are reported as cash flows from investing activities in the statement of cash flows. Answer: False - Transactions...

The chief advantage of preferred stock is that its dividends must be paid before any dividends can be paid to common shareholders.

The chief advantage of preferred stock is that its dividends must be paid before any dividends can be paid to common shareholders. Answer: T...

A stock split results in a decrease in the par value of the stock, and a proportionate increase in the number of shares outstanding.

A stock split results in a decrease in the par value of the stock, and a proportionate increase in the number of shares outstanding. Answer: ...

A large stock dividend is recorded at the par value of the shares distributed.

A large stock dividend is recorded at the par value of the shares distributed. Answer: Tru...

Common stock with a low dividend yield would not appeal to potential investors who need steady income from dividends.

Common stock with a low dividend yield would not appeal to potential investors who need steady income from dividends. Answer: Tru...

The dividend yield ratio measures the dividend return on the par value of the stock.

The dividend yield ratio measures the dividend return on the par value of the stock. Answer: False - The dividend yield ratio measures the dividend...

When no other qualifying statements are made, the term "dividend" can mean either a cash or a stock dividend.

When no other qualifying statements are made, the term "dividend" can mean either a cash or a stock dividend. Answer: False - Without a qualifier,...

Treasury stock consists of unissued shares of the company's stock.

Treasury stock consists of unissued shares of the company's stock. Answer: False - Treasury stock consists of shares of company stock that the...

When shareholders in a corporation sell all or part of their holdings to other private individuals, no entry is required on the part of the corporation.

When shareholders in a corporation sell all or part of their holdings to other private individuals, no entry is required on the part of the corpora...

Contributed capital from the sale of stock with a par value is usually divided between amounts received equal to par value of the shares sold and amounts received in excess of par.

Contributed capital from the sale of stock with a par value is usually divided between amounts received equal to par value of the shares sold and amounts...

Legal capital is a permanent amount of capital that owners cannot withdraw.

Legal capital is a permanent amount of capital that owners cannot withdraw. Answer: Tru...

If a corporation only has one class of stock, it is common stock.

If a corporation only has one class of stock, it is common stock. Answer: Tru...

EPS is an effective and widely used measure of liquidity.

EPS is an effective and widely used measure of liquidity. Answer: False - EPS is an effective and widely used measure of profitability (rather...

The earnings per share (EPS) ratio is computed by dividing net income by average number of common shares issued during the period.

The earnings per share (EPS) ratio is computed by dividing net income by average number of common shares issued during the period. Answer: False...

Unlimited liability refers to the fact that creditors of a liquidated corporation can put claims on the assets of shareholders for debts that corporate assets are insufficient to pay.

Unlimited liability refers to the fact that creditors of a liquidated corporation can put claims on the assets of shareholders for debts that corporate...

When treasury stock is help, the number of shares issued and the number of shares outstanding differ by the number of shares of treasury stock held.

When treasury stock is help, the number of shares issued and the number of shares outstanding differ by the number of shares of treasury stock held...

Outstanding shares refer to the total number of shares of stack that are owned by stockholders on any particular date.

Outstanding shares refer to the total number of shares of stack that are owned by stockholders on any particular date. Answer: Tru...

The number of authorized shares in a corporation refers to the original number of shares issued when that company "went public".

The number of authorized shares in a corporation refers to the original number of shares issued when that company "went public". Answer: False...

Assume the bonds are retired early at the call price. Determine the loss on the bond call.

Bonds Payable balance (1,000 × $1,000) = $1,000,000 Discount on Bonds Payable balance = $40,000 Call price per bond = $1,010 Assume the bonds are...

A $100,000, 10-year, 8% bond that pays interest semiannually was sold for $87,539 when the market rate of interest was 10%. Using the effective-interest method, determine how much of the interest expense, to the nearest dollar, for the second interest period?

A $100,000, 10-year, 8% bond that pays interest semiannually was sold for $87,539 when the market rate of interest was 10%. Using the effective-interest...

A $100,000, 10-year, 8% bond that pays interest semiannually was sold for $87,539 when the market rate of interest was 10%. Using the effective-interest method, determine how much of the bond discount would be credited to Discount on Bonds Payable at the end of the first interest period?

A $100,000, 10-year, 8% bond that pays interest semiannually was sold for $87,539 when the market rate of interest was 10%. Using the effective-interest...

A corporation with a high times interest earned ratio means that:

A corporation with a high times interest earned ratio means that: A) the company's operating income is equal to its interest obligations. B) the company's...

What is the selling price (to the nearest dollar) of 4-year bonds with a par value of $200,000 and an annual coupon rate of 8% that are sold when the market rate of interest is 12%?

Periods 8%/10%/12%/14% 1/0.9259/0.9091/0.8929/0.8772 2/0.8573/0.8264/0.7972/0.7695 3/0.7938/0.7513/0.7118/0.6750 4/0.7350/0.6830/0.6355/0.5921 Periods 8%/10%/12%/14% 1/0.9259/0.9091/0.8929/0.8772 2/1.7883/1.7355/1.6901/1.6467 3/2.5771/2.4869/2.4018/2.3216 4/3.3121/3.1699/3.0373/2.9137 What...

When the premium on bonds is amortized, the amount of recognized interest expense is

When the premium on bonds is amortized, the amount of recognized interest expense is A) greater than the amount of cash paid for interest. B) equal...

Accounting for a zero coupon bond is similar to

Accounting for a zero coupon bond is similar to A) accounting for a bond sold at a discount. B) accounting for a bond sold at a premium. C) accounting...

Bonds with a par value of $500,000 are sold at discount for $481,000. Other than the Cash account, what other account is debited.

Bonds with a par value of $500,000 are sold at discount for $481,000. Other than the Cash account, what other account is debited. A) Premium on Bonds...

A bond issued and supported by the general credit standing of the corporation, rather than supported with pledged assets, is called

A bond issued and supported by the general credit standing of the corporation, rather than supported with pledged assets, is called A) a serial bond. B)...

Which of the following may be a disadvantage to issuing bonds to raise long-term capital?

Which of the following may be a disadvantage to issuing bonds to raise long-term capital? A) interest payments to bondholders are fixed charges B)...

When using the effective-interest method of amortization, the book value of the bonds changes by what amount on each interest payment date?

When using the effective-interest method of amortization, the book value of the bonds changes by what amount on each interest payment date?  a....

When using the effective-interest method of amortization, interest expense reported in the income statement is impacted by the

When using the effective-interest method of amortization, interest expense reported in the income statement is impacted by the  a. Par value...

To determine whether a bond will be sold at a premium, discount, or face value, one must know which of the following pairs of information?

To determine whether a bond will be sold at a premium, discount, or face value, one must know which of the following pairs of information?  a....

A bond with a face value of $100,000 was issued for $113,500 on January 1, 2009. The stated rate of interest is 8 percent and the market rate of interest was 10 percent when the bond was sold. Interest is paid annually. How much interest will be paid on December 31, 2009?

A bond with a face value of $100,000 was issued for $113,500 on January 1, 2009. The stated rate of interest is 8 percent and the market rate of interest...

Which of the following is false when a bond is issued at a premium?

Which of the following is false when a bond is issued at a premium?  a. The bond will issue for an amount above its par value. b. Bonds payable...

Which of the following is not an advantage of issuing bonds when compared to issuing additional shares of stock in order to obtain additional capital?

Which of the following is not an advantage of issuing bonds when compared to issuing additional shares of stock in order to obtain additional capital?  a....

Annual interest expense for a single bond issue continues to increase over the life of the bonds. Which of the following explains this?

Annual interest expense for a single bond issue continues to increase over the life of the bonds. Which of the following explains this?  a. The...

Scuppers Boat Works, Inc. issued 200 bonds to finance expansion into a new line of designs. The bonds had a total principal of $200,000. The bonds will pay interest semiannually on June 30 and December 31 at a rate of 9% per annum and mature in five years. On January 1, 200A, the day the bonds were issued, similar securities were yielding a rate of 10% per annum. Scuppers' underwriter, Reedham and Quip, purchased the entire issue to resell them to individual investors. Scuppers retained the right to buy back the bonds from the bondholders in two years at a price of $102.

Use the following information to answer the remaining questions. Scuppers Boat Works, Inc. issued 200 bonds to finance expansion into a new line of...

When scuppers decided to issue the bonds, they would have executed a bond contract, or _____, which spelled out the terms of the bond, and any privileges and covenants.

Use the following information to answer the remaining questions. Scuppers Boat Works, Inc. issued 200 bonds to finance expansion into a new line of designs....

The stated rate of interest on the bonds is _____; bondholders will be paid $_____ every _____.

Use the following information to answer the remaining questions. Scuppers Boat Works, Inc. issued 200 bonds to finance expansion into a new line of designs....

Use the following information to answer the remaining questions. Scuppers Boat Works, Inc. issued 200 bonds to finance expansion into a new line of designs. The bonds had a total principal of $200,000. The bonds will pay interest semiannually on June 30 and December 31 at a rate of 9% per annum and mature in five years. On January 1, 200A, the day the bonds were issued, similar securities were yielding a rate of 10% per annum. Scuppers' underwriter, Reedham and Quip, purchased the entire issue to resell them to individual investors. Scuppers retained the right to buy back the bonds from the bondholders in two years at a price of $102. The par value of the bond issue is

Use the following information to answer the remaining questions. Scuppers Boat Works, Inc. issued 200 bonds to finance expansion into a new line of...

Transactions involving bonds would be reported on the statement of cash flows as follows:

Transactions involving bonds would be reported on the statement of cash flows as follows: a. the issuance of the bonds as a cash inflow from financing...

Blazing Lasers Co. retired $400,000 face value of bonds when the discount on bonds payable account had a balance of $32,495. They paid $360,000 to retire the bonds. Blazing Lasers would report a _____ on its income statement.

Blazing Lasers Co. retired $400,000 face value of bonds when the discount on bonds payable account had a balance of $32,495. They paid $360,000 to retire...

The effective interest method of amortizing discount or premium

The effective interest method of amortizing discount or premium a. yields a consistent amount of interest, but a different interest rate, each period. b....

When bonds are issued at a premium, interest expense

When bonds are issued at a premium, interest expense  a. will be equal to cash interest paid each compounding period b. will be less than the...

When a bond is issued at a discount

When a bond is issued at a discount a. the company did not receive as much money as it needed b. the market rate was lower than the coupon rate c....

A significant advantage for the holders of bonds, as opposed to other debt, is the

A significant advantage for the holders of bonds, as opposed to other debt, is the a. freedom from risk that is provided by an investment into cash b....

The capital structure of a company is

The capital structure of a company is a. its property, plant and equipment b. the mixture of debt and equity used to finance its operations c. the...

Payments of interest expense on bonds are reported as outflows of cash in the financing section of the statement of cash flows.

Payments of interest expense on bonds are reported as outflows of cash in the financing section of the statement of cash flows. Answer: False...

If bonds do not have a call feature, the issuer of the bonds cannot retire them early.

If bonds do not have a call feature, the issuer of the bonds cannot retire them early. Answer: False - In some cases, a company may elect to...

A call premium, stated as a percentage of par value, is often included in the bond indenture in the event that bonds are retired before their maturity date.

A call premium, stated as a percentage of par value, is often included in the bond indenture in the event that bonds are retired before their maturity...

A high debt-to-equity ratio suggests that a company relies heavily on funds provided by creditors.

A high debt-to-equity ratio suggests that a company relies heavily on funds provided by creditors. Answer: Tru...

The debt-to-equity ratio is calculated by dividing total liabilities by owners' equity.

The debt-to-equity ratio is calculated by dividing total liabilities by owners' equity. Answer: Tru...

The sum of the cash interest payments less the premium on the bond payable on the date of issue is the total interest expense on the bond.

The sum of the cash interest payments less the premium on the bond payable on the date of issue is the total interest expense on the bond. Answer...

When a company issues bonds, it tries to set the coupon rate on the bond slightly higher than the market rate so that the bond can be issued at a premium and they will receive more money.

When a company issues bonds, it tries to set the coupon rate on the bond slightly higher than the market rate so that the bond can be issued at a premium...

Straight-line amortization of discount or premium is simpler, but the effective-interest method is the theoretically preferred method.

Straight-line amortization of discount or premium is simpler, but the effective-interest method is the theoretically preferred method. Answer:&nb...

The net liability of a bond at any point in in time is the present value of the future cash flows from the bond, discounted at the market interest rate on the date of issue of the bond.

The net liability of a bond at any point in in time is the present value of the future cash flows from the bond, discounted at the market interest rate...

A zero coupon bond is one on which no periodic cash interest payments are made.

A zero coupon bond is one on which no periodic cash interest payments are made. Answer: Tru...

A high times interest earned ratio suggests that there is an extra margin of protection in case of deterioration in profitability.

A high times interest earned ratio suggests that there is an extra margin of protection in case of deterioration in profitability. Answer: T...

The times interest earned ratio is computed by dividing net income by interest expense.

The times interest earned ratio is computed by dividing net income by interest expense. Answer: False - The times interest earned ratio is computed...

The underwriter of the bonds determines the price at which the bonds will be sold.

The underwriter of the bonds determines the price at which the bonds will be sold. Answer: False - neither the issuing company nor the underwriter...

The par value of a bond is minimum legal amount below which teh bond cannot be issued.

The par value of a bond is minimum legal amount below which teh bond cannot be issued. Answer: False - the par value is the face value of the...

An independent trustee is appointed in a bond issue to control the money raised and the payment of interest and principal.

An independent trustee is appointed in a bond issue to control the money raised and the payment of interest and principal. Answer: False - an...

A debenture is another word for any bond.

A debenture is another word for any bond. Answer: False - a debenture is an unsecured bond. some bonds are secured by specific assets, and, as...

Financial leverage is the ratio of debt to equity financing.

Financial leverage is the ratio of debt to equity financing. Answer: False - financial leverage is the ability of a company to invest borrowed...

One disadvantage of bonds compared to stock, for financing a company's operations is that dividends on stock are discretionary, whereas bond interest must be paid.

One disadvantage of bonds compared to stock, for financing a company's operations is that dividends on stock are discretionary, whereas bond interest...