Accounting Ch 15

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CHAPTER 15

STOCKHOLDERS’ EQUITY

IFRS questions are available at the end of this chapter.

TRUE-FALSe—Conceptual

Answer No. Description

T 1. State a corporation incorporates in. F 2. Definition of preemptive right. T 3. Common stock as residual interest. F 4. Earned capital definition. T 5. Reporting true no-par stock. F 6. Allocating proceeds in lump sum sales. T 7. Accounting for stock issued for noncash consideration. F 8. Definition of treasury stock. F 9. Reporting treasury stock under cost method. T 10. Selling treasury stock below cost. F 11. Participating preferred stock. T 12. Callable preferred stock. T 13. Restricting legal capital. F 14. Disclosing dividend policy. F 15. Affect of dividends on total stockholders’ equity. T 16. Property dividends definition. T 17. Accounting for small stock dividend. F 18. Stock splits and large stock dividends. F 19. Computing rate of return on common stock equity. T 20. Computing payout ratio.

Multiple Choice—Conceptual

Answer No. Description

c 21. Nature of stockholders' interest. b 22. Pre-emptive right. a 23. Pre-emptive right. b S24. Definition of legal capital. c S25. Definition of residual owner. c 26. Nature of stockholders' equity. d 27. Sources of stockholders' equity. d 28. Classification of stockholders' equity. d 29. Allocation methods for a lump sum issuance. b 30. Capital stock issued in payment of services. a 31. Costs of issuing capital stock. b 32. Creation of "secret reserves." a P33. Authorized shares. d S34. Par value stock. b S35. Legal restrictions for profit distributions. a S36. Acquisition of treasury shares. d P37. Treasury shares definition. c 38. Purchase of treasury stock at greater than par value.
Multiple Choice—Conceptual (cont.)

Answer No. Description

a 39. Sale of treasury stock. a…...

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