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A corporation must record a gain on sale

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1. A corporation must record a gain on sale for the sale of treasury stock at an amount greater than its purchase price.
TRUE
FALSE

2. If a company does not have enough cash to pay out regular dividends, but still wishes to give the shareholders something that they would consider of value, the company should consider doing a stock split.
TRUE
FALSE

3. The journal entry to record the declaration of a dividend includes a credit to Cash.
TRUE
FALSE

4. If preferred stock is non-cumulative, then the company does NOT need to pay dividends that were passed in previous years.
TRUE
FALSE

5. On June 30, 2014, Stephans Company showed the following data on the equity section of their balance sheet:
Stockholders' equity
Common stock, $1 par 100,000 shares authorized $40,000
40,000 shares issued
Paid-in capital in excess of par 260,000
Retained earnings 940,000
Total stockholder's equity $1,240,000

On July 1, 2014, Stephans distributed a 5% stock dividend. The market value of the stock at that time was $13 per share. Following this transaction, the total shareholders’ equity would go down by $26,000.

TRUE
FALSE

6. All forms and classes of stock carry voting rights.
TRUE
FALSE

7. The account to be debited when a stock dividend is declared and distributed on the same date would be:
A) Common stock.

B) Retained earnings
C) Dividends.
D) Paid-in capital in excess of par.

8. A corporation is a separate legal entity formed under the laws of a particular state.
TRUE
FALSE

9. The declaration of a stock dividend creates a liability for the corporation.
TRUE
FALSE

10. Which of the following statements is TRUE?

A) The purchase of treasury stock decreases assets and decreases stockholders' equity.
B) The purchase of treasury stock increases assets and increases stockholders' equity.
C) The purchase of treasury stock increases assets and decreases stockholders' equity.
D) The purchase of treasury stock decreases assets and increases stockholders' equity.




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