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Exam 12: Statement of Cash Flows

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Question 1

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At the end of 20E,the total assets of Dole Corporation were $90,000 and total liabilities were $50,000.The company has been in business five years and has earned an average profit of $4,000 per year during the five years.Total cash dividends of $8,000 were declared and paid.What was the total amount received for the shares issued by the company?

A) $28,000
B) $30,000
C) $40,000
D) $46,000

E) A) and C)
F) All of the above

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Question 2

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One of the preferences given to preferred share owners over common share owners is the right to vote on major corporate issues.

A) True
B) False

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Question 3

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In a stock split,the total amount of contributed capital is changed,whereas in a share dividend,the total amount of contributed capital is usually unchanged.

Cash dividends usually involve the transfer of some amount of retained earnings to contributed capital.

While a cash dividend reduces assets,a stock dividend only shuffles amounts between shareholders' equity accounts.

The Basket Corporation has the following classes of shares: Preferred shares,$40,1,000 shares issued and outstanding,noncumulative. Common shares,100,000 shares issued,50,000 shares outstanding. In 20A,Basket Corporation was incorporated.It paid no dividends in its first year of existence.In 20B,the board of directors of Basket declared a total dividend of $180,000 to be paid to the holders of preferred and common shares.What was the amount of the dividend paid in 20B on each common share?

Which of the following statements about treasury share transactions is correct?

The most common reason a company would declare a share split is to reduce the market price of its share to increase the trading activity.

Which one of the following events would not require a journal entry on a corporation's books?

The statement of financial position of Warner Company showed the following data about its common shares: authorized shares,100,000; outstanding shares,55,000; and issued shares 60,000.What was the number of treasury shares?

The date of payment for a cash dividend is before the date of record.

Albert Company reported the following statement of financial position amounts at December 31,20B: What was the total amount of retained earnings on December 31,20B?

The dividend yield ratio measures the dividend return on the current price of the shares.

With respect to preferred shares,select the statement that is correct.

Which is not true about preferred shares?

Legal capital is the permanent amount of capital,defined by law,that must remain invested in the corporation.

On December 15,20B,the board of directors of Home Corporation declared a cash dividend,payable on January 8,20C,of $2 per share on the 100,000 common shares outstanding.The accounting period ends December 31.Because of this action,on December 15,20B,Home Corporation should do which of the following?

Dole Corporation is in the process of preparing the statement of retained earnings for the annual period ended December 31,20D.During the preparation process,the company accountant discovered an error in the 20B depreciation.There is a restriction on retained earnings for treasury shares that cost $25,000.You are to complete the following statement by filling in the blanks.

Which of the following is false about the dividend yield ratio?

A stock split also involves the distribution of additional shares to shareholders but no additional amount is transferred into the Common Shares account from the Retained Earnings account.