(Multiple Choice)
1. Katz Corporation has issued 400,000 shares of common stock and holds 20,000 shares in treasury. The charter authorized the issuance of 500,000 shares. The company has declared and paid a dividend of $1 per share. What is the total amount of the dividend?
a. $400,000
b. $20,000
c. $380,000
d. $500,000

2. Which statement regarding treasury stock is false?
a. Treasury stock is considered to be issued but not outstanding.
b. Treasury stock has no voting, dividend, or liquidation rights.
c. Treasury stock reduces total equity on the balance sheet.
d. None of the above are false.

3. Which of the following statements about stock dividends is true?
a. Stock dividends are reported on the statement of cash flows.
b. Stock dividends are reported on the statement of retained earnings.
c. Stock dividends increase total equity.
d. Stock dividends decrease total equity.

4. Which order best describes the largest number of shares to the smallest number of shares?
a. Shares authorized, shares issued, shares outstanding.
b. Shares issued, shares outstanding, shares authorized.
c. Shares outstanding, shares issued, shares authorized.
d. Shares in the treasury, shares outstanding, shares issued.

5. A company issued 100,000 shares of common stock with a par value of $1 per share. The stock sold for $20 per share. By what amount does stockholders’ equity increase?
a. $100,000
b. $1,900,000
c. $2,000,000
d. No change in stockholders’ equity

6. A journal entry is not recorded on what date?
a. Date of declaration.
b. Date of record.
c. Date of payment.
d. A journal entry is recorded on all of these dates.

7. A company has net income of $225,000 and declares and pays dividends in the amount of $75,000. What is the net impact on retained earnings?
a. Increase of $225,000
b. Decrease of $75,000
c. Increase of $150,000
d. Decrease of $150,000

8. Which statement regarding dividends is false?
a. Dividends represent a sharing of corporate profits with owners.
b. Both stock and cash dividends reduce retained earnings.
c. Cash dividends paid to stockholders reduce net income.
d. None of the above statements are false.

9. When treasury stock is purchased with cash, what is the impact on the balance sheet equation?
a. No change: the reduction of the asset cash is offset with the addition of the asset treasury stock.
b. Assets decrease and stockholders’ equity increases.
c. Assets increase and stockholders’ equity decreases.
d. Assets decrease and stockholders’ equity decreases.

10. Does a stock dividend increase an investor’s personal wealth immediately?
a. No, because the stock price falls when a stock dividend is issued.
b. Yes, because the investor has more shares.
c. Yes, because the investor acquired additional shares without paying a brokerage fee.
d. Yes, because the investor will receive more in cash dividends by owning more shares.