Question

Q5- Which of the following significant dates for cash dividends doesn't require an accounting entry?
a) Declaration date.
b) Date of record.
c) Payment date.
d) Both (A) nor (C) require an accounting entry.

Q6- Regarding common stock, the ______ is an arbitrary amount assigned to each share of stock when it is authorized:
a) Market value.
b) Outstanding value.
c) Book value.
d) Par value.

Q7- A class of stock that is usually non-voting but has preferential claims to dividends over common stock is:
a) Common stock.
b) Treasury stock.
c) Preferred stock.
d) Employee stock.

Q8- Which of the following statements about Treasury stock is TRUE?
a) Treasury stock is a contra-equity account.
b) Treasury stock is increased with a debit entry.
c) Treasury stock is reported on the Balance Sheet.
d)All the above are TRUE.

Answer 1

5. Option B

No journal entry is required on the date of record.

6. Option D

Stock "Par value" is an arbitrary amount assigned to each share of a given class of stock when it is authorized.

7. Option C

Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights.

8. Option D

Treasury stock reflects the difference between the number of shares issued and the number of shares outstanding. When a corporation holds treasury stock, a debit balance exists in the general ledger account Treasury Stock (a contra stockholders' equity account).

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