Question 1
WHICH ONE DOES NOT DECREASE ASSET AT THE DISTRIBUTION DATE?
Response: STOCK DIVIDENDS
Correct answer: SCRIP DIVIDENDS
Score: 0 out of 1.5 No
Question 2
A primary source of stockholders’ equity is
Response: both income retained by the corporation and contributions by stockholders.
Correct answer: both income retained by the corporation and contributions by stockholders.
Score: 1.5 out of 1.5 Yes
Question 3
Which of the following represents the total number of shares that a corporation may issue
under the terms of its charter?
Response: authorized shares
Correct answer: authorized shares
Score: 1.5 out of 1.5 Yes
Question 4
A DIVIDEND PAYABLE IN MERCHANDISE IS CALLED A
Response: PROPERTY DIVIDEND.
Correct answer: PROPERTY DIVIDEND.
Score: 1.5 out of 1.5 Yes
Question 5
WHICH ONE DOES NOT DECREASE RETAINED EARNINGS
Response: DIVIDENDS
Correct answer: NET INCOME
Score: 0 out of 1.5 No
Question 6
WHO ARE ENTITLED TO DIVIDENDS
Response: ISSUED AND OUTSTANDING SHARES
Correct answer: ISSUED AND SUBSCRIBED SHARES
Score: 0 out of 1.5 No
Question 7
IF THE EXCESS DIVIDENDS ARE DISTRIBUTED TO BOTH COMMON AND PREFERRED
STOCKHOLDERS,THE PREFERRED SHARES ARE PRESUMED TO BE
Response: PARTICIPATING.
Correct answer: PARTICIPATING.
Score: 1.5 out of 1.5 Yes
Question 9
A DISTRIBUTION OF EARNED PROFITS IN THE FORM OF CASH, PROPERTY OR STOCK
Response: DIVIDEND
Correct answer: DIVIDEND
Score: 1.5 out of 1.5 Yes
Question 10
POWER CORPORATION DECLARED A PROPERTY DIVIDENDS OF 10 MERALCO SHARES FOR
ONE POWER SHARE HELD. POWER SHARE HAS A PAR VALUE OF P50 AND A MARKET CALUE
OF P100.
THE MERALCO SHARES WERE ORIGINALLY PURCHASED AT P10 PER SHARE. ITS FAIR MARKET
VALUE ON DECLARATION WAS P20 AND ON DISTRIBUTION DATE WAS P25. DIVIDENDS
SHOULD BE
RECORDED AT?
Response: P100
Correct answer: P25
Score: 0 out of 2 No
Question 11
A DIVIDEND DECLARED OUT OF THE INVESTMENT IN STOCKS OF OTHER COMPANIES IS A
Response: STOCK DIVIDEND.
Correct answer: PROPERTY DIVIDEND.
Score: 0 out of 1.5 No
Question 12
THE FOLLOWING CONDITIONS MUST BE PRESENT FOR CASH DIVIDENDS TO BE DISTRIBUTED
EXCEPT
Response: SUFFICIENT UNISSUED SHARES.
Correct answer: SUFFICIENT RETAINED EARNINGS.
Score: 0 out of 1.5 No
Question 13
WHICH ONE DOE NOT AFFECT TOTAL STOCKHOLDERS EQUITY?
Response: STOCK DIVIDENDS
Correct answer: STOCK DIVIDENDS
Score: 1.5 out of 1.5 Yes
Question 14
Stockholders’ equity is generally classified into two major categories:
Response: appropriated capital and retained earnings.
Correct answer: appropriated capital and retained earnings.
Score: 1.5 out of 1.5 Yes
Question 15
WGA CORP DECLARED A 10% CASH DIVIDEND IN DECEMBER 1 PAYABLE TO SHAREHOLDERS
ON RECORD AS OF DECEMBER 31. A SHAREHOLDER WITH 100 SHARES OF A P10 PAR STOCK
WHO BOUGHT ANOTHER 100 SHARES ON DECEMBER 15 WILL RECEIVE. DIVIDENDS SHOULD
BE RECORDED AT
Response: P1000
Correct answer: P100
Score: 0 out of 2 No
Question 16
DIVIDENDS IN ARREARS ARE DISTRIBUTED TO PREFERRED STOCKHOLDERS
Response: BOTH 1 AND 2
Correct answer: BOTH 1 AND 2
Score: 1.5 out of 1.5 Yes
Question 17
AN EXAMPLE OF A VOLUNTARY APPROPRIATION IS AN APPROPRIATION FOR
Response: BOND REDEMPTION.
Correct answer: MACHINE ACQUISITION.
Score: 0 out of 1.5 No
Question 18
STOCKS WERE SOLD FOR CASH TO 10,000 STOCKHOLDERS ON MARCH 1,2012.THE BOARD OF
DDIRECTORS DECLARED A CASH DIVIDEND OF P10 ON NOVEMBER 30 TO STOCKHOLDERS
ON RECORD AS OF DECEMBER 15,PAYABLE ON DECEMBER 20.THE ACCOUNTANT SHOULD
NOT PREPARE AN ENTRY ON
Response: DECEMBER 20.
Correct answer: DECEMBER 15
Score: 0 out of 1.5 No
Question 19
PRETTY CORPORATION DECLARED A 10% STOCK DIVIDEND. PAR VALUE OF ITS STOCK IS P100
WHILE THE FAIR MARKET VALUE AT DECLARATION DATE WAS P150 AND AT DISTRIBUTION
DATE WAS P175.
RETAINED EARNINGS SHOULD BE DEBITED FOR
Response: P15
Correct answer: P150
Score: 0 out of 2
Question 1
The par value of common stock must always be equal to its market value on the date the
stock is issued.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 3
Retained earnings are a part of stockholders’ equity.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 4
Stock can be issued only in exchange for cash.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 5
A corporation acts under its own name rather than in the name of its stockholders.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 6
In general, as soon as a corporation is authorized to sell stock, an accounting journal entry should be
made recording the total value of the shares authorized.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 7
A corporation can be organized for the purpose of making a profit or it may be nonprofit.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 8
Retained earnings are subtracted from paid-in capital to arrive at total stockholders’
equity.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 9
When a corporation has only one class of capital stock, it is identified as preferred stock.
Response: False
Correct answer: False
Score: 1 out of 1 Yes
Question 10
Dividends are declared out of retained earnings.
Response: True
Correct answer: True
Score: 1 out of 1 Yes
Question 11
When no-par value stock does not have a stated value, the entire proceeds from the
