Question 19 : Restrictions of retained earnings:

• are reported as expenses on the income statement.
• do not change total stockholders' equity.
• are reported on the balance sheet as liabilities.
• provide insurance coverage for contingencies

Question 21 : A corporation is formed when:

• it is granted by-laws by the federal government.
• it borrows money.
• it receives a charter from its president.
• None of the other choices are correct.

Question 22 : Which of the following may either increase or decrease retained earnings?

• Disposals of treasury stock.
• Net income.
• Stock dividends.
• Prior period adjustments.

Question 24 : Under the equity method of accounting, the investment in common stock is initially recorded at cost and the investment account is subsequently:

• credited for cash dividends received and debited for the investor's share of investee net income.
• debited for cash dividends received and credited for the investor's share of investee net income.
• credited for cash dividends received.
• debited for the investor's share of investee net income.

Question 25 : The preparation of consolidated financial statements are not useful to:

• creditors of the company.
• the parent company.
• the subsidiary company.
• only the parent and the subsidiary company

Question 26 : The account Unrealized Loss-Income is reported:

• as a contra account in the stockholders' equity section of the balance sheet.
• as a contra account in the current asset section of the balance sheet.
• in the other expenses and losses section of the income statement.
• in the operating section of the income statement.

Question 28 : Dior Manufacturing purchased 100% of Venus, Inc. common stock for $900,000 when Venus had stockholders' equity consisting of $400,000 of common stock and $300,000 of retained earnings. In the consolidated balance sheet, Dior's investment in Venus will be shown at:

• $700,000.
• $0.
• $900,000.
• $100,000.

Question 31 : Adam Corporation purchased 3,000 shares of Ozark Company's common stock for $12 per share as a long-term available-for-sale investment on June 30, 2014. Ozark declared and paid a cash dividend of $1.00 per share on its common stock on September 30, and had a closing fair value of $18 per share on December 31. Assuming this investment is appropriately accounted for using the fair value method, it will increase Adam's 2014 income before taxes by (do not show your work; just enter your answer):

Question 32 : Clayton Inc. purchased 30% of the outstanding common stock of Austin Industries on January 1, 2014, for $180,000. Austin reported net income of $70,000 for 2014 and declared and paid cash dividends on common stock of $30,000. The amount of Clayton's investment in Austin on December 31, 2014, should be (do not show your work; just enter your answer):