26._______ Treasury Stock is reported on the balance sheet a. as an addition to

Question

26._______         Treasury Stock is reported on the balance sheet    a. as an addition to Common Stock    b. as an addition to Paid in Capital in Excess of Par        c. as a deduction from Stockholders’ Equity   d. as an addition to Stockholders’ Equity

_27.______         On a cash flow statement, the net cash flow reconciles the beginning and ending balances of…a. net income    b. the accumulated depreciation account   c. the common stock account    d. the cash account

28._______         When John borrowed money for his new car on an installment loan, his accountant advised him that each payment made for the car would consist of   a. principal repayment only   b. principal plus interest on the unpaid balance     c. interest only   d. none of these

_29.______         Which of the following will decrease Retained Earnings for a corporation?           a. declaring a dividend; b. issuing common stock      c. closing a net income d. paying a dividend in cash   e. purchase of treasury stock

30._______         When a small stock dividend is declared, the amount debited to Retained Earnings should be the    a. par value of the shares    b. the book value of the shares        c. the earnings per share   d. the market value per share

II. Name the 4 Rights of the Common Stockholder:

1.

2.

3.

4.

III. Why would a company purchase its own stock?

Explanation / Answer

26. c. as a deduction from Stockholders’ Equity   , it is a deduction from Equity because Treasury Stock is a buy back of common stock

27. d. the cash account , net cash flow is the difference between the beginning and closing balance of cash account , which shows:

Net increase or decrease in cash from activities+Cash and cash equivalent at beginning = Cash and cash equivalent at end   

28. b. principal plus interest on the unpaid balance , each payment consists of principal repayment amount and interest amount on remainning or unpaid balance of Principal

29. a. declaring a dividend , because Delcaring a dividend , results in debiting the "retained Earning" beacuse dividend is paid off from Retained Earning

Note:- Retained Earning Dr.

To Dividend Payable   

30. d. the market value per share , Small stock dividend is paid at by considering market value of per share and Utilising the Cr. balance of Retained Earning to pay dividend :

   Note:- Retained Earning Dr.

To Dividend payable

To Paid in capital excess of Par amount

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