1. On February 1, a company declares a cash dividend, payable on March 1, to stockholders of record on February 20. March 1 is the:
a. payment date.
b. date of declaration.
c. date of record.
d. dividend date.
2. On the date that a dividend is declared, what account is debited for the total amount of the dividend?
a. Cash
b. Dividends Receivable
c. Dividends Payable
d. Retained Earnings
3. A company declares a $.10 per share dividend when it has 100,000 shares authorized and 40,000 issued and outstanding. What is the amount of the dividend?
a. $10,000
b. $6,000
c. $40,000
d. $4,000
4. On June 4, a company declares a $32,000 dividend to be paid on June 15 to stockholders of record on June 10. On June 15, the company would record:
a. no entry.
b. an entry that debits Dividends Payable for $32,000.
c. an entry that credits Dividends Payable for $32,000.
d. an entry that debits Common Stock for $32,000.
5. If a company has 200,000 outstanding shares and issues a 10% stock dividend, how many outstanding shares will there be following this dividend?
a. 200,000
b. 180,000
c. 202,000
d. 220,000
6. A company with 500,000 outstanding shares of $.25 par common stock issues a 50% stock dividend when the stock is selling for $30 per share. What is the value of this stock dividend?
a. $7,500,000
b. $125,000
c. $62,500
d. $1,875,000
7. Which of the following is true concerning a stock dividend?
a. A stock dividend is a distribution of assets
b. A stock dividend does not change a stockholder's ownership percentage
c. A stock dividend usually does not result in any change to the market price of individual shares
d. A stock dividend is never stated in percentage terms
8. Which of the following describes the nature of a stock split?
a. A stock split is not considered to be an accounting transaction
b. Stock splits apply to all authorized shares
c. A stock split results in a proportional change in the per share par value of the stock
d. All of the above describe the nature of stock splits
9. Which of the following is true regarding preferred stock?
a. Preferred stockholders are often given priority over common stockholders in the receipt of dividends
b. When a company liquidates, preferred stockholders normally receive residual assets before common stockholders
c. Both a and b
d. Neither a nor b