Question 1 Corporations are required to make quarterly estimated tax payments ba

Question

Question 1

Corporations are required to make quarterly estimated tax payments based on estimated tax expense.

Question 2

Both cash dividends and stock dividends decrease the total stockholder's equity.

Question 3

The Stockholder's Equity section of the balance sheet reports contributed capital separate from retained earnings.

Question 4

Retained earnings do not represent a cash fund.

Question 5

A declaration and distribution of a 20 percent stock dividend on common stock will:

not change the total stockholder's equity

Increase the assets of the corporation

result in an increase in the book value of each share of common stock outstanding

increase the liabilities of the corporation

Question 6

The declaration of a cash dividend will result in a decrease in:

cash

retained earnings

Contributed capital

Income taxes

Question 7

Treasury Stock is often purchased for all the following reasons except:

to distribute at a later date in connection with an employee incentive plan.

to avoid a hostile takeover.

To maintain or increase market value for the company stock.

To increase stockholders' book value per share.

Question 8

To systematically accumulate cash for the retirement of bonds at maturity, a corporation may set up a bond sinking fund investment.

Question 9

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

Question 10

If the market rate of interest on the day that bonds are issued is lower than the face rate of interest the bonds will sell at a discount.

Question 11

When bonds are sold at a market price of 105, the cash received for the bonds is 105 percent of face value

Question 12

When bonds mature, a corporation will pay the bondholders

the current market value of the bonds.

the face mount plus the original premium or minus the original discount.

the face amount plus the interest accrued since the date the bonds were issued.

the face amount of the bonds.

Explanation / Answer

1.True

2.False

3.True

4.

5. result in an increase in the book value of each share of common stock outstanding

6.retained earnings

7.To increase stockholders' book value per share.

8.True

9.False

10.False

3.True

4.

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