FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- All of the following are rationales given for a stock dividend or split EXCEPT A. there is positive informational content associated with the announcement. B. the price will not fall proportionately to the share increase. C. conservation of corporate cash. D. an optimum price range does not exist.arrow_forwardThe declaration of the dividends by a company has no effect on the retained income of the company, true or false?arrow_forwardIndicate whether the following statements are true or false. If the statementis false, explain why.a. If a firm repurchases its stock in the open market, the shareholders whotender the stock are subject to capital gains taxes.arrow_forward
- The cash flows associated with common stock are more difficult to estimate than those related to bonds because stock has a residual claim against the company versus a contractual obligation for a bond. Group of answer choices True Falsearrow_forwardWhich of the following statements is false? Multiple Choice Both stock splits and stock dividends increase the number of common shares issued. Both stock splits and stock dividends increase the number of common shares outstanding. Stock splits reallocate amounts between retained earnings and contributed capital accounts. Both stock splits and stock dividends have the impact of reducing the market price of the stock.arrow_forwardWhat is the purpose of a stock dividend or stock split? How does a stock split impact a company's financial statements? How does a stock split impact a stockholders' individual investment?What is a reverse stock split?arrow_forward
- When non-par value shares are reacquired at a cost greater than their average issue price and cancelled, what account(s) should be debited? Select one: a. The share account for the total cost. b. The share account for the average issue price, contributed surplus-repurchases up to its account balance, other contributed surplus relating to this class of shares in proportion to the number of shares repurchased versus outstanding and lastly retained earnings for any remaining amount. c. The share account for the average per share amount, retained earnings for the additional amount, and lastly contributed surplus for any remaining amount. d. The share account for the average per share amount and a loss account for the additional amount. e. none of the above answers are correct.arrow_forwardUnder IFRS, the unrealized loss on trading investments should be reported: a. as part of other comprehensive loss, reducing net income. b. on the income statement, reducing net income. c. as part of other comprehensive loss, not affecting net income. d. directly to stockholders' equity, bypassing the income statement.arrow_forwardWhen you are purchasing a company stock, you are purchasing part of the company. True Falsearrow_forward
- Which of the following statements is false? A. Mutual funds are pool investor funds to purchase financial instruments and thus reduce risks through diversification. B. Initial public offering (IPO) occurs when firm issues stock in the public market for the first time. C. The difference between current assets and non-current assets equals to working capital. D. Owner’s equity is the residual interest in assets that remains after subtracting an entity’s liabilities.arrow_forwardIn a stock split, zero basis is allocated to the new shares. True or Falsearrow_forwardWhich statement regarding treasury stock is false?a. Treasury stock is considered to be issued but notoutstanding.b. Treasury stock has no voting, dividend, or liquidationrights.c. Treasury stock reduces total stockholders’ equity onthe balance sheet.d. None of the above are false.arrow_forward
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