Questions -

Question 1 - The date on which a cash dividend becomes a binding legal obligation is on the

declaration date

date of record

payment date

last day of the fiscal year

Question 2 - The effect of the declaration of a cash dividend by the board of directors is to

decrease cash and increase stockholders equity

decrease cash and decrease retained earnings

increase liabilities and decrease retained earnings

increase liabilities and increase retained earnings

Question 3 - The effect of a stock dividend is to

decrease total assets and stockholders' equity.

change the composition of stockholders' equity.

decrease total assets and total liabilities.

increase the book value per share of common stock.

Question 4 - Dividends Payable is classified as a(n)

current asset

current liability

owners' equity

long-term liability

Question 5 - Stock splits

decrease retained earnings

increase par value

do not change total stockholders' equity

decrease outstanding shares

Question 6 - Manner, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2010. There were no dividends declared in 2009. The board of directors declares and pays a $45,000 dividend in 2010. What is the amount of dividends received by the common stockholders in 2010?

$0

$25,000

$45,000

$20,000

Question 7 - Lopez, Inc. has 2,000 shares of 4%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2009, and December 31, 2010. The board of directors declared and paid a $3,000 dividend in 2009. In 2010, $15,000 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 2010?

preferred $9,000; common $6,000

preferred $7,500; common $7,500

preferred $5,000; common $10,000

preferred $4,000; common $11,000

Question 8 - On January 1, Castagno Corporation had 800,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 15% stock dividend. Market value of the stock was $15/share. As a result of this event,

Castagno's Paid-in Capital in Excess of Par Value account increased $600,000.

Castagno's total stockholders' equity was unaffected.

Castagno's Retained Earnings account decreased $1,800,000.

all of the above.

Question 9 - On January 1, Swanson Corporation had 60,000 shares of $10 par value common stock outstanding. On March 17, the company declared a 15% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The entry to record the transaction of March 17 would include a

credit to Retained Earnings for $27,000.

credit to Cash for $117,000.

credit to Common Stock Dividends Distributable for $90,000.

debit to Common Stock Dividends Distributable for $90,000.

Question 10 - On January 1, Sanford Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 15% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The stock was distributed on June 30. The entry to record the transaction of June 30 would include a

credit to Common Stock for $120,000.

debit to Common Stock Dividends Distributable for $180,000.

credit to Paid-in Capital in Excess of Par Value for $60,000.

debit to Retained Earnings for $60,000.