1. Which of the following statements about stock dividends is true?

• Stock dividends increase the number of shares outstanding.
• Stock dividends are more valuable than stock splits.
• Stock dividends are recorded as a reduction in cash.
• Stock dividends are dividends given in the form of stock from another company.

2. (TCO E) Treasury stock is:

• investments in government securities.
• retained earnings that have been appropriated to make equity investments.
• a company's own stock that it has repurchased.
• assets held for safekeeping in company's vaults.

3. Which of the following would not be found listed as a liability on a company's balance sheet?

• Operating lease obligations
• Capital lease obligations
• Bonds payable
• Taxes payable

4. Which of the following is not a component of pension expense?

• Service cost
• Interest cost
• Actual return on plan assets
• Expected return on plan assets

5. Deferral of unrealized gains or losses may generate major difference between the economic pension cost and the:

• reported pension.
• company pension.
• past pension.
• post retirement pension.

6. Minority interest appears on the balance sheet of some companies. Minority interest:

• is classified as a liability.
• is classified as equity.
• arises when a company records investments using the equity method.
• arises when a company owns controlling interest in another company, but less than 100%.

7. Which of the following would be found listed as a liability on a company's balance sheet?

• Operating lease obligations
• Projected benefit obligation
• Purchase commitment obligation
• Post-retirement benefits other than pension obligation

8. Investing in equity is considered to involve more risk than investing in:

• stocks.
• bonds.
• cash.
• gold.

9. A lessee must account for a lease as a capital lease if:

• the lease is shorter than 20 years.
• the present value of leases is greater than 10% of lessee's assets.
• the lease is longer than 20 years.
• None of the above

10. If a company that leases equipment from another company records these leases as operating leases rather than capital leases, its:

• recorded liabilities will be lower.
• recorded assets will be higher.
• total cash flows will be higher.
• leverage ratios will be higher.