Chapter 14: Retained Earnings, Treasury Stock, and the Income Statement Mid-Chapter Assessment Quiz

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1.	A stock dividend is a distribution of a corporation's own stock to its stockholders.
	True
	False
2.	The purchase of treasury stock increases total assets.
	True
	False
3.	A corporation may never retire its preferred stock.
	True
	False
4.	Which of the following would a stock dividend increase?
	Par value per share.
	Retained earnings.
	Total assets and total liabilities.
	Shares outstanding.
5.	In a 2-for-1 stock split, the balance in the common stock account:
	doubles.
	is cut in half.
	stays the same.
	cannot be determined from the information given.
6.	Treasury stock:
	is an asset account.
	has a normal credit balance.
	increases the number of shares outstanding.
	is a contra stockholders' equity account.
7.	The entry to record a corporation's purchase of 5,000 shares of its common stock at $40 per share includes a:
	debit to Cash of $200,000.
	debit to Treasury Stock for $200,000.
	credit to Retained Earnings.
	credit to Common Stock.
8.	The entry to record the sale of 5,000 shares of treasury stock that cost $15 per share for $18 per share includes a:
	credit to Paid-in Capital from Treasury Stock Transactions for $15,000.
	debit to Treasury Stock for $90,000.
	credit to Cash for $90,000.
	credit to Gain for $15,000.
9.	Assuming no treasury stock has been reissued prior to this transaction, the entry to record the sale of 5,000 shares of treasury stock that cost $15 per share for $13 per share includes a:
	debit to Cash for $75,000.
	credit to Treasury Stock for $65,000.
	debit to Loss for $10,000.
	debit to Retained Earnings for $10,000.
10.	The journal entry for distribution of a large stock dividend would include:
	a debit to Paid-in Capital in Excess of Par.
	a credit to Retained Earnings.
	a credit to Common Stock.
	a debit to Cash.