Accounting 102 Chp.14 practice test

Entries for cash dividends are required on the:

Declaration date and the payment date

Preferred stock may have priority over common stock in each of the following except in:

Voting

Which of the following statements about a 3-for-1 stock split is true?

It will have no effect on total stockholders equity.

The effect of the declaration of a cash dividend by the Board of Directors is to:

Increase liabilities and decrease stockholder equity.

The cumulative effect of the declaration and payment of a cash dividend on a company‘s financial statement is to:

Decrease total assets and stockholders’ equity.

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Total Assets: No change

Total liabilities: Increase

Total Stockholders’ Equity: Decrease

A prior period adjustment for understatement of net will:

Be credited to the retained earnings account

Identify the effect on the par value of a stock when a stock dividend is declared and the stock is distributed.

No effect

A 3-for-1 common stock split will increase total stockholders’ equity, but reduce the par or stated value per share of common stock.

False

A correction in income of a prior period involves either a debit or credit to the retained earnings account.

True

Three important dates when cash dividends are involved are: The date of declaration, The record date, and The payment date.

True

A stock split does not have any effect on total paid-in-capital, retained earnings, or total stockholder equity.

True

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

True