Anonymous
Anonymous asked in Business & FinanceOther - Business & Finance · 1 decade ago

Accounting Help! 8 T/F ?'s?

True/False

1. Although preferred stockholders have a greater chance of receiving a regular dividend, common stockholders have a greater chance of receiving large dividends.

2. The declaration of stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

3. The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock.

4. Since a stock split changes information of a business, this transaction needs to be recorded as a journal entry.

5. If the bondholder has the right to exchange a bond for shares of common stock, the bond is called a convertible bond.

6. If the straight-line method of amortization is used, the amount of unamortized premium on bonds payable will decrease as the bonds approach maturity.

7. Amortization is the allocation process of writing off bond premiums and discounts to interest expense over the life of the bond issue.

8. When the effective interest method of amortization is used, the amount of interest expense for a given period is calculated by multiplying the face rate of interest by the bond's carrying value at the beginning of the given period.

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  • JKRB
    Lv 7
    1 decade ago
    Favorite Answer

    1. Although preferred stockholders have a greater chance of receiving a regular dividend, common stockholders have a greater chance of receiving large dividends.

    Since common stock dividends are not based on a set amount, there is a chance of receiving large dividends.

    True

    2. The declaration of stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

    The entry is

    Dr Dividends (decreases stockholders' equity)

    Cr Dividends Payable (increases liabilities)

    True

    3. The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock.

    The journal entry is

    Dr Treasury Stock (decreases stockholders' equity)

    Cr Cash

    True

    4. Since a stock split changes information of a business, this transaction needs to be recorded as a journal entry.

    Since it has no monetary effects on any account, a stock split need not be journalized.

    False

    5. If the bondholder has the right to exchange a bond for shares of common stock, the bond is called a convertible bond.

    True

    6. If the straight-line method of amortization is used, the amount of unamortized premium on bonds payable will decrease as the bonds approach maturity.

    True

    7. Amortization is the allocation process of writing off bond premiums and discounts to interest expense over the life of the bond issue.

    True

    8. When the effective interest method of amortization is used, the amount of interest expense for a given period is calculated by multiplying the face rate of interest by the bond's carrying value at the beginning of the given period.

    It is determined by multiplying the MARKET RATE of interest.

    False

  • 4 years ago

    tricky territory to walk in. I'm from a big city, but the highschool I went to was almost all white, so I can kind of understand your dilema, but you still have to be carefull. You might think you are asking an innocent question & not realize how offensive the question is. Try doing it on a less public forum. Either find a forum specifically for that topic or find a pen pal or someone that you can talk to. Let them know upfront that you might ask offensive questions out of ignorance, but that is why you are doing this, let them know that you are just trying to educate youself. Also try to be sensitive... this can be a very emotional topic so phrase your questions carefully & if you get a negative response then count that as part of your answer, the question you asked was obviously hurtful weather you meant it to be or not. You may have had good intentions, but if the person percieved it has hurtful, the hurt was just as real.

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