True/False The ability to convert preferred stock to common stock can make the p

Question

True/False

The ability to convert preferred stock to common stock can make the preferred stock less attractive to investors.

The entry to record the payment of a cash dividend includes a debit to Retained Earnings and a credit to Cash.

When treasury stock is purchased, the Treasury Stock account is debited for the entire amount paid for the stock.

The Dividends Payable accounts appear on the balance sheet as a current liability.

The entry to record the distribution of a stock dividend includes a credit to Common Stock Dividend Distribution.

The dissolution of a partnership and the formation of a new partnership may have no noticeable effect on the continuing operations of the business.

If a new partner purchases an interest in a partnership firm directly from an existing partner, the Cash account is debited and the new partner's capital account is credited.

The entry to close a partner's drawing account at the end of a fiscal period includes a debit to the partner's drawing account.

The rate of return on total assets measures how effectively management has used the assets of the company.

Salary and interest allowances for partners are treated as expenses of the firm and are used in the determination of net income.

Amortizing bond premiums over the period from the issue date to the maturity date reduces bond interest expense shown on the income statement.

Interest on bonds must be paid in full even when the corporation operates at a loss.

The amount received in excess of the par value of preferred stock issued is recorded in an account called Paid-in Capital in Excess of Par Value-Preferred Stock.

A legal partnership does not exist unless there is a written partnership agreement.

In horizontal analysis, the base year is the most recent year.

Explanation / Answer

Answer:

The ability to convert preferred stock to common A2:A13stock can make the preferred stock less attractive to investors. True because The conversion feature is initially set at a conversion rate that is not attractive to investors at the point of purchase. The entry to record the payment of a cash dividend includes a debit to Retained Earnings and a credit to Cash. True When treasury stock is purchased, the Treasury Stock account is debited for the entire amount paid for the stock. False because more than the total par value of treasury shares, the excess is credited to additional paid-in capital account The Dividends Payable accounts appear on the balance sheet as a current liability. True because Dividends payable is recorded as a current liability on the company's books
The entry to record the distribution of a stock dividend includes a credit to Common Stock Dividend Distribution. True because credit to Common Stock and a debit to Retained Earnings The dissolution of a partnership and the formation of a new partnership may have no noticeable effect on the continuing operations of the business. True because other parners may continue the operations. If written agreement contain require information than information is required. If a new partner purchases an interest in a partnership firm directly from an existing partner, the Cash account is debited and the new partner's capital account is credited. False because When the new partner purchases interest from existing partners at book value, the transaction is recorded by crediting the capital account of the new partner and debiting the capital account of existing partner(s). The entry to close a partner's drawing account at the end of a fiscal period includes a debit to the partner's drawing account. False because debit to parners drawing account will increase their balance. The rate of return on total assets measures how effectively management has used the assets of the company. True because ROA was developed by DuPont to show how effectively assets are being used.
Salary and interest allowances for partners are treated as expenses of the firm and are used in the determination of net income. False because Salaries to partners and interest on partners' capital are not expenses of the partnership Amortizing bond premiums over the period from the issue date to the maturity date reduces bond interest expense shown on the income statement. True because the process of amortizing the premium will decrease the bond's interest expense recorded on the issuing company's financial records.
Interest on bonds must be paid in full even when the corporation operates at a loss. True because interest are paid in all conditions. The amount received in excess of the par value of preferred stock issued is recorded in an account called Paid-in Capital in Excess of Par Value-Preferred Stock. True A legal partnership does not exist unless there is a written partnership agreement. False because partnership does not need to be any written agreement for a partnership to exist. In horizontal analysis, the base year is the most recent year. False because current year is not the base year

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