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Exam 12: Statement of Cash Flows

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Question 51

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Dividends in arrears are liabilities of the corporation.

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Question 52

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With respect to a corporation, select the statement that is false:

A) A corporation cannot sue others or be sued.
B) Ownership rights to the corporation are transferable.
C) Its organization requires an approved charter which is governed by state law.
D) A corporation is a separate legal entity from its owners.

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Question 53

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When a corporation calls in its outstanding shares and issues two or more shares with a lower value in place of each share called in, the corporation is said to have issued a stock split.

Before the journal entry to record income tax and before the closing entries were recorded at the end of the accounting period (December 31, 20D) , the following data were taken from the accounts of Buynow Corporation: What is the total amount of shareholders' equity that should be reported on the statement financial position dated December 31, 20D?

On which of the following dates should the dividends payable account be recorded in the company records for a stock dividend?

Preferred shares provide investors certain advantages, but not dividend preferences and a preference on asset distributions in the event the corporation is liquidated.

A very low dividend yield ratio is usually indicative of a growth-oriented corporation.

A stock dividend results in

Most companies provide needed funds for expansion from a combination of operating and financing activities. This means that cash flow used by investing activities is usually provided by positive cash flow from operations and through a combination of borrowings or share issuances.

Some preferred share issues are redeemable at the option of the shareholder.

Dividends may be declared and paid in cash or stock.

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

When preferred shares are cumulative and the board of directors passes on a dividend, the amount in arrears must be shown as a liability on the statement of financial position and a reduction from retained earnings on the statement of shareholders' equity and the statement of financial position.

The per share amount normally assigned by the board of directors to a stock dividend is

Assume the following shares outstanding: (1) Preferred shares, $3, cumulative, 1,000 shares with dividends in arrears 3 years, for 20A, 20B, and 20C. (2) Common shares, 2,000 shares. Total dividends declared in 20D were $30,000. What is the total amount of dividends to which common shareholders are entitled?

Miter Corporation had a credit balance of $5,450,000 in its retained earnings account as of January 1, 2014. During the year Miter paid $250,000 in dividends, reported net earnings of $560,000 and comprehensive income of $750,000. The December 31 balance of retained earnings is:

A stock split will

Stock splits and stock dividends are basically the same from the viewpoint of the shareholders but not from the viewpoint of the corporation.

A stock split results in a transfer at market value from retained earnings to share capital.

From an investor's viewpoint, in today's litigious environment, what would be considered the most advantageous characteristic of the corporate form of organization?