Wk 4 Wiley Plus True and False Questions
Week 4 Wiley True/False & Multiple Choice
Copyright © 2010 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 7/e
Type True/False in the box provided
1. The cost method derives its name from the fact that the Treasury Stock account is maintained at the cost of shares purchased.
TRUE |
2. When treasury stock is sold for an amount greater than cost, the difference should be credited to Gain on Sale of Treasury Stock and reported as other income on the Income
Statement.
FALSE |
3. Stockholders’ liability is generally unlimited; therefore, creditors have recourse to stockholders’ personal assets as well as corporate assets. FALSE |
4. Retained earnings is net income retained in a corporation and is often referred to as earned capital. TRUE |
5. A corporation is bound to a contract entered into by one of its stockholders. FALSE |
6. Issued shares of stock less outstanding shares equals treasury stock. TRUE |
7. The cumulative feature of stock only applies to preferred stock. TRUE |
8. Dividends in arrears are not considered a liability because no obligation exists until the dividend is declared by the board of directors. TRUE |
9. A prior period adjustment always includes a credit to Retained Earnings. FALSE |
10. Three important dates relating to cash dividends are: date of declaration, date of record, and date of payment.
TRUE |
11. To be considered a short-term investment, the investment must be readily marketable and management should intend to convert the investment into cash within the next year or operating cycle, whichever is longer. TRUE |
12. Accounting for short-term investments involves entries for the acquisition, interest and dividend revenue, and the sale. TRUE |
13. The accounting guidelines for long-term investments in stock are based on the extent of the investor’s influence over the operating affairs of the issuing corporation. TRUE
Copyright © 2010 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 7/e
Type True/False in the box provided
1. The cost method derives its name from the fact that the Treasury Stock account is maintained at the cost of shares purchased.
TRUE |
2. When treasury stock is sold for an amount greater than cost, the difference should be credited to Gain on Sale of Treasury Stock and reported as other income on the Income
Statement.
FALSE |
3. Stockholders’ liability is generally unlimited; therefore, creditors have recourse to stockholders’ personal assets as well as corporate assets. FALSE |
4. Retained earnings is net income retained in a corporation and is often referred to as earned capital. TRUE |
5. A corporation is bound to a contract entered into by one of its stockholders. FALSE |
6. Issued shares of stock less outstanding shares equals treasury stock. TRUE |
7. The cumulative feature of stock only applies to preferred stock. TRUE |
8. Dividends in arrears are not considered a liability because no obligation exists until the dividend is declared by the board of directors. TRUE |
9. A prior period adjustment always includes a credit to Retained Earnings. FALSE |
10. Three important dates relating to cash dividends are: date of declaration, date of record, and date of payment.
TRUE |
11. To be considered a short-term investment, the investment must be readily marketable and management should intend to convert the investment into cash within the next year or operating cycle, whichever is longer. TRUE |
12. Accounting for short-term investments involves entries for the acquisition, interest and dividend revenue, and the sale. TRUE |
13. The accounting guidelines for long-term investments in stock are based on the extent of the investor’s influence over the operating affairs of the issuing corporation. TRUE