15 5 questions 1 in order for the board of directors of a corporation to declare a c 4307883

15 5 questions 1 in order for the board of directors of a corporation to declare a c 4307883

15.5   Questions

1) In order for the board of directors of a corporation to declare a cash dividend, there must be sufficient ________ and ________.

A) revenues; expenses

B) net income; cash

C) retained earnings; cash

D) revenues; cash

2) Cash dividends are a distribution of ________ to ________.

A) profits; creditors

B) revenues; owners

C) retained earnings; claimants

D) cash; stockholders

3) Retained earnings are a general claim against ________.

A) cash

B) a particular asset

C) long-term assets

D) total assets

4) When cash dividends are declared, ________ decreases.  When cash dividends are paid, ________ decreases.

A) retained earnings; net profit

B) net profit; retained earnings

C) cash; retained earnings

D) retained earnings; cash

5) The board of directors of Riverside Company declared a cash dividend.  Two weeks later, the dividend was disbursed to stockholders.  The dividend disbursement will ________.

A) decrease net income

B) decrease stockholders' equity

C) decrease liabilities

D) increase stockholders' equity

6) Pacer Company has the following information available for the most current year:

Paid-in capital, January 1, 2010$475,000

Total revenues in 2010$890,000

Total expenses in 2010$550,000

Dividend declared in 2010$70,000

What was Pacer Company's net income for the year ended December 31, 2010?

A) $250,000

B) $340,000

C) $390,000

D) $405,000

7) Shack Company has the following information available for the most current year:

Paid-in capital, January 1, 2010$475,000

Total revenues in 2010$870,000

Total expenses in 2010$550,000

Dividend declared in 2010$70,000

Dividend paid in 2010$70,000

Investments by owners in 2010$0

What was the paid-in capital at December 31, 2010 for Shack Company?

A) $250,000

B) $320,000

C) $475,000

D) $795,000

8) Retained earnings indicate the amount of cash available for distribution to shareholders.

9) Dividends paid are considered an expense on the income statement.

10) Dividends reduce stockholders' equity when declared.

11) Retained earnings are a specific claim against specific assets.

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