FINALS IN PARTNERSHIP AND CORPORATION SCORE:

NAME & SECTION: ADEVA, MARIA KATHREENA ANDREA NUMBER: 1

INSTRUCTION: DO NOT FORGET TO WRITE YOUR NAME, YEAR AND

SECTION AND SEAT NUMBER.

MULTIPLE CHOICE QUESTIONS: ENCIRCLE THE CORRECT ANSWER.

1. One advantage of a corporation is that it …

A. Makes a larger profit than other types of businesses.
B. Has the ability to raise an unlimited amount of capital.
C. Is owned by only a few people.
D. Allows its shareholders to have a say in daily operations of the business.

2. The legal document that outlines the set of rules and regulations for a company is called a
___________.
A. Stock
B. Proxy
C. Corporation
D. Charter

3. The _________ sets the policies of the company, determines the particular products or
services to be produced, and decides how the profits will be used.
A. Executives
B. Shareholders
C. Board of Directors
D. Administrators

4. If a corporation paid out a total of Php250,000 in dividends on 25,000 shares, the holder
of one share would receive ___________.
A. Php200
B. Php100
C. Php50
D. Php10

5. The executive group is appointed by the ____________.

A. Shareholders
B. The people with the most proxy votes
C. The company’s charter
D. Board of directors

6. The daily operations of a corporation are managed by the ____________.

A. Executives
B. Shareholders
C. Board of directors
D. Employees

7. A disadvantage of a corporation is …
A. The executives and shareholders have little personal contact with employees or
customers.
B. Shareholders make less profit.
C. Profits are taxed several times by the government.
D. They destroy the environment.

8. A company’s executive group is composed of …

A. The board of directors and the shareholders.
B. The owners, management, and employees.
C. A president, vice-president, secretary, and treasurer.
D. Those who have the most proxy votes.
9. The corporation’s ownership is divided up into many small parts, each of which is called
a _____________ or a ____________.
A. Share, stock
B. Charter, proxy
C. Share, dividend
D. Proxy, stock

10. The owners of a corporation are referred to as _____________.

A. Creditors
B. Directors
C. Shareholders
D. Members

11. Profit paid to a corporation is called ______________.

A. Profit
B. Shares
C. Dividends
D. Assets

12. A business owned by shareholders is called a corporation or a ___________ company.

A. Co-operative
B. Limited
C. Crown
D. Franchise

13. A corporation where vacancies in the Board of Directors, are filled only by the remaining
members of the board, is:
A. Open Corporation
B. Corporation Sole
C. Eleemosynary Corporation
D. Close Corporation

14. The following, except one, are qualifications of corporate directors:

A. Must continuously own at least one share during their term as directors.
B. Must own at least one share of stock.
C. Ownership of shares must be recorded in the books of the corporation.
D. Majority are citizens of the Philippines.

15. In a corporation, two or more positions may be held concurrently by the same person,
except that no one person shall act as:
A. President and Chairman of the Board
B. Secretary and Treasurer
C. Treasurer and Director
D. President and Secretary

16. Which of the following is a disadvantage of forming a corporation?

A. The shareholders are not liable for the debts of the business.
B. The subservience of minority stockholders to the wishes of the majority subject only
to equitable restraints.
C. Because of the power of succession, the existence of the entity is not affected by the
personal vicissitudes of the individual shareholders.
D. The free and ready transferability of ownership.

17. How many number of votes of the Board of Directors are required to change the name of
the corporation?
A. 2/3 vote of all members of the Board
B. 2/3 vote of all present
C. Majority vote of all present constituting a quorum
D. Majority vote of the Board
18. A private corporation commences to have corporate existence and juridical personality
from the date:
A. The officers of the corporation are elected by the stockholders.
B. The incorporators sign the Articles of Incorporation.
C. The Articles of Incorporation and By-laws are presented to the SEC.
D. The SEC issues it certificate of incorporation under its seal.

19. From a shareholder’s point of view, the purchase of shares in a Pty Ltd company may be
an attractive option because:
A. The investor has limited liability.
B. The company has limited liability.
C. Both the investor and the company have limited liability.
D. The shares can be freely traded on a stock market.

20. Concerning liability of partners for the debts of the firm, select the most appropriate
statement:
A. A partner is generally liable for the acts of a fellow partner.
B. A partner is always liable for the acts of other partners.
C. A partner is never liable for the acts of other partners.
D. A partner’s liability can be limited if they act in good faith.

21. One of the statements relating to partnerships is correct?

A. Partnerships are terminated and reconstituted each time a partner joins or leaves.
B. Partnership property is individually owned by the partner(s) who brought asset(s)
into.
C. Partnership is a separate legal entity.
D. A partnership cannot register a business name because it is not an incorporated entity.

22. When comparing trusts and companies, one of the following statements is incorrect:
A. The trustee is the legal owner of the trust property, while the company’s assets belong
to the company, not its directors or members.
B. Directors owe fiduciary duties to the company, whereas a trustee does not owe such
duties.
C. Company directors can take reasonable business risks, while trustees are required to
act within the terms of the trust deed when dealing with the trust property.
D. A shareholder of a company is in a contractual relationship with the company but a
beneficiary of a trust is not bound in contract with the trust(or with any other

23. In a corporate group consisting of one parent company and three subsidiaries, which of
the following statement is correct?
A. Each company in the group is a separate legal entity.
B. Only the parent company is a separate legal entity.
C. The group (in combination) is a separate legal entity.
D. Any of the above, depending on whether the subsidiaries are wholly owned or partly.

24. Which of the following statement relating to pre-registration contracts is incorrect?

A. Not enforceable under common law because a company yet to be formed does not
have.
B. Binding upon the company once it is registered and ratifies the contract.
C. Binding upon the promoters if the company is not registered or fails to ratify the
contract.
D. A company will never be bound by them.

25. What is a quorum?

A. The number of members required to pass a special resolution.
B. The minimum number of members who must be present at a member’s meeting to
properly conduct business which is set at 2 throughout the meeting under the
replaceable.
C. The minimum number of members who must be present at a member’s meeting to
properly conduct business which is set at 5 throughout the meeting under the
replaceable rules.
D. A person who votes on behalf of an absent natural person member.
26. The members of Bandict Ltd have passed a resolution to sell the company’s factory.
Which of the following statements is correct?
A. The directors have to comply with the member’s resolution.
B. The directors do not have to comply with the member’s resolution as they can rely on
the case of Automatic Self-Cleansing Filter Cunninghame.
C. The directors can ignore the member’s resolution as members do not have any say in
any company matters.
D. The directors have to comply with the member’s resolution and if they do not, they
will automatically be removed by the members.

27. Which of the following statements is correct?

A. For both public and proprietary companies, the members in general meeting have a
statutory power to remove directors.
B. For both public and proprietary companies, the members in general meeting only
have a constitutional right to remove directors.
C. In a public company, the members in general meeting have a statutory power to
remove directors.
D. In a public company, the board of directors have a statutory power to remove
directors.

28. Which of the following powers are generally conferred upon the board of directors
through the company’s internal rules?
A. Management power and the power over share transfers.
B. Management power and the power to create/amend internal rules.
C. Power over share transfers and the power to create/amend internal rules.
D. Power to issue shares and power to remunerate directors.

29. Which of the following statements is true?

A. Any member can request the directors to call a general meeting.
B. Members holding 10% of the votes, or 100 members, may request the directors to call
a general meeting and if they fail to call the meeting in time, the members may call
the meeting and the directors may be liable for the cost.
C. Members holding 5% of the votes, or 100 members, may request the directors to call
a general meeting and if they fail to call the meeting in time, the members may call
the meeting and the directors may be liable for the cost.
D. Members holding 5% of the votes, or 100 members, may request the directors to call
a general meeting and if they fail to call the meeting in time, the members may call
the meeting but they will be liable for the cost.

30. What terminology would you use to define the director of the company who is an officer
of a financial institution who has lent money to the company?
A. Alternative director
B. Non-executive director
C. Managing director
D. Nominee director

31. Which of the following statement is correct?

A. An executive director is a part-time director of the company who is not an employee.
B. An executive director is both on the board of directors and a full time employee of the
C. An executive director is a person appointed by a director to act in her or his place for
a
D. An executive director is the head of all other directors.

32. Bob has been appointed Managing Director of Pierce Pty Ltd. He is authorised by the
company’s constitution to sign contracts of up to Php100,000 and expenditure in excess
of Php100,000 requires member’s approval. Bob signs a contract to buy machinery from
Princess Cut Inc. of Php200,000 without seeking member’s approval. Which of the
following statement is correct?
A. Pierce Pty Ltd is not bound by the contract because Bob has no authority to enter into
a Php200,000 contract with Princess Cut Inc.
 B. Pierce Pty Ltd is bound by the contract since Bob as Managing Director has
customary power to enter into such contracts and Princess Cut Inc. would not have
known that Bob does not have authority.
C. Pierce Pty Ltd is not bound by the contract even though Bob as Managing Director
has customary power to enter into such contracts since Princess Cut Inc. would have
known that Bob does not have authority from the company’s constitution.
D. Pierce Pty Ltd is bound by the contract since Managing Directors can always bind the
company in contract.

33. Which of the following is not a type of authority given to an agent?

A. Apparent authority
B. Express actual authority
C. Implied express authority
D. Implied actual authority

34. The company’s decision-making power is split between the organs of the company. The
organs of the company are:
A. The members in general meeting and each individual director.
B. Each individual member and the board of directors.
C. The members in general meeting and the board of directors.
D. The members in general meeting, the board of directors and the employees of the

35. Which one of the following generally has the customary authority to bind the company?
A. Any individual director
B. The chairperson
C. The managing director
D. A non-executive director

36. XYZ Ltd’s company seal is affixed to a mortgage in breach of the company’s
constitution. Which of the following is correct?
A. The mortgage is unenforceable but the directors will be personally liable to the
lenders for the company’s debt.
B. The mortgage is unenforceable.
C. The mortgage is enforceable as the lender may assume that the company seal has
been affixed in accordance with the company’s constitution.
D. The mortgage is unenforceable unless the lender made inquiries as to the company’s
compliance with the company’s constitution.

37. Section 180(1) of the Corporations Act 2001 (Cth) imposes an obligation on directors to
exercise care and diligence but what is this measured against?
A. The other directors in the company.
B. The business judgements already serving as precedents in corporate law.
C. The degree of care and diligence that a reasonable person would exercise if they were
a director of the company in the same circumstances.
D. The degree of care and diligence that the particular director reasonably believes to be
appropriate.

38. In relation to a director’s duty of care, which of the following statements is not correct?
A. A director is expected to read the company’s financial statements only if they are
qualified to interpret them.
B. A director must, at all times, keep abreast of every aspect of the company’s business
and affairs.
C. A director must take steps to ensure that they are familiar with the company’s
business and affairs.
D. A director must set in place effective mechanisms to ensure that the company is being
properly run.

39. In ASIC v Rich [2009] NSWSC1229 it was held that the officers could rely on the
business judgement rule. Which of the following statements in relation to the business
judgement rule is correct?
A. Failure to undertake proper oversight of the company’s affairs cannot be a business
judgement.
 B. A ‘business judgement’ involves a decision to take or not to take action in respect to
matters relevant to the business operations of the company.
C. Directors may not be liable if they were not aware of available information that was
relevant to the business decision made.
D. All of the above are correct.

40. Thee directors of Spandex Ltd opened a new outlet in an elite shopping centre without
doing a proper feasibility study. Within six months of the opening of the new outlet, it
becomes apparent that the company was not in a financial position to have taken such a
step. The company is unable to pay its debts and a liquidator has been appointed. What
duty under general law would the directors of Spandex Ltd have breached by not carrying
out a feasibility study?
A. Conflict of interest
B. Duty of care, skill and diligence
C. Good faith and proper purpose
D. Disclosure

41. The form of business organization that has the largest sales volume is the:
A. Partnership
B. Corporation
C. Cooperative
D. Multinational

42. The simplest form of business ownership is a:

A. Proprietorship
B. Partnership
C. Corporation
D. Cooperative

43. Which of the following is an advantage of a sole proprietorship?

A. Ease of starting a business
B. Being your own boss
C. Pride of ownership
D. All of the above

44. The main disadvantage of a general partnership is:

A. The unlimited liability of the partners
B. Disagreement amongst partners
C. Shared management
D. Difficulty of termination

45. A ___________ is a business with two or more owners:

A. Corporation.
B. Conglomerate.
C. Partnership.
D. Public Corporation.

46. A partner who is not actually involved in the partnership but lends his name for public
relations purposes is a:
A. Silent Partner
B. General Partner
C. Nominal Partner
D. Dominant Partner

47. A_____________partner is an owner who has unlimited liability and is active in

managing the firm:
A. Senior Partner
B. General Partner
C. Silent Partner
D. Limited Partner
48. Which of the following is an example of a public corporation?
A. Imperial Oil
B. Hospital for Sick Children
C. Mouvement Caisse Desjardin
D. YMCA

49. Which of the following is probably the most important reason for incorporating?
A. Limited liability of shareholders
B. More money for investment
C. Increased flexibility
D. Shared management

50. Which of the following is an example of a non-profit organization?

A. Royal Bank
B. YMCA
C. BCE
D. Air Canada

51. A__________ provides for the greatest degree of continuity:

A. General partnership
B. Joint venture
C. Corporation
D. Sole proprietorship

52. The major advantage of a franchise is:

A. Training and management assistance
B. Personal ownership
C. Nationally recognized name
D. All of the above

53. Which of the following is a characteristic of a co-operative?

A. Profits are not subject to income tax.
B. One vote per share.
C. Dividends are paid on a per share basis.
D. All of the above.

54. The most effective form of business organization for raising capital is the:
A. Joint venture
B. Partnership
C. Corporation
D. Proprietorship

55. Co-operatives play an important role in:

A. Aerospace
B. Agriculture
C. Manufacturing
D. All of the Above

56. Under the corporate form of business organization

A. Stockholder is personally liable for the debts of the corporation.
B. Stockholders' acts can bind the corporation even though the stockholders have not
been appointed as agents of the corporation.
C. The corporation's life is stipulated in its charter.
D. Stockholders wishing to sell their corporation shares must get the approval of other
stockholders.

57. Stockholders of a corporation directly elect

A. The president of the corporation.
B. The board of directors.
C. The treasurer of the corporation.
D. All of the employees of the corporation.
58. The chief accounting officer in a company is known as the
A. Controller
B. Treasurer
C. Vice-President
D. President

59. A factor which distinguishes the corporate form of organization from a sole
proprietorship or partnership is that
A. A corporation is organized for the purpose of making a profit.
B. A corporation is subject to numerous federal and state government regulations.
C. A corporation is an accounting economic entity.
D. A corporation's temporary accounts are closed at the end of the accounting period.

60. Which one of the following would not be considered an advantage of the corporate form
of organization?
A. Limited liability of owners
B. Separate legal existence
C. Continuous life
D. Government regulation

61. The two ways that a corporation can be classified by purpose are
A. General and limited
B. Profit and nonprofit
C. State and federal
D. Publicly held and privately held

62. The two ways that a corporation can be classified by ownership are
A. Publicly held and privately held
B. Stock and non-stock
C. Inside and outside
D. Majority and minority

63. Which of the following would not be true of a privately held corporation?
A. It is sometimes called a closely held corporation.
B. Its shares are regularly traded on the New York Stock Exchange.
C. It does not offer its shares for sale to the general public.
D. It is usually smaller than a publicly held company.

64. Which of the following is not true of a corporation?

A. It may buy, own, and sell property.
B. It may sue and be sued.
C. The acts of its owners bind the corporation.
D. It may enter into binding legal contracts in its own name.

65. Bob Rice has invested Php400,000 in a privately held family corporation. The
corporation does not do well and must declare bankruptcy. What amount does Rice stand
to lose?
A. Up to his total investment of Php400,000.
B. Zero
C. The Php400,000 plus any personal assets the creditors demand.
D. Php200,000

66. Which of the following statements reflects the transferability of ownership rights in a
corporation?
A. If a shareholder decides to transfer ownership, he must transfer all of his shares.
B. A shareholder may dispose of part or all of his shares.
C. A shareholder must obtain permission of the board of directors before selling shares.
D. A shareholder must obtain permission from at least three other stockholders before
selling shares.

67. A corporate board of directors does not generally

A. Select officers
 B. Formulate operating policies
C. Declare dividends
D. Execute policy

68. The officer that is generally responsible for maintaining the cash position of the
corporation is the
A. Controller
B. Treasurer
C. Cashier
D. Internal Auditor

69. The ability of a corporation to obtain capital is

A. Enhanced because of limited liability and ease of share transferability.
B. Less than a partnership.
C. Restricted because of the limited life of the corporation.
D. About the same as a partnership.

70. Which of the following statements concerning taxation is accurate?

A. Partnerships pay state income taxes but not federal income taxes.
B. Corporations pay federal income taxes but not state income taxes.
C. Corporations pay federal and state income taxes.
D. Only the owners must pay taxes on corporate income.

71. Which of the following statements is not considered a disadvantage of corporate form of
organization?
A. Additional taxes
B. Government regulations
C. Limited liability of stockholders
D. Separation of ownership and management

72. Which one of the following is not an ownership right of a stockholder in a corporation?
A. To vote in the election of directors
B. To declare dividends on the common stock
C. To share in assets upon liquidation
D. To share in corporate earnings

73. If no-par stock is issued without a stated value, then

A. The par value is automatically Php1 per share.
B. The entire proceeds are considered to be legal capital.
C. There is no legal capital.
D. The corporation is automatically in violation of its state charter.

74. If a stockholder cannot attend a stockholders' meeting, he may delegate his voting rights
by means of
A. An absentee ballot
B. A proxy
C. A certified letter
D. A telegram

75. The term residual claim refers to a shareholder's right to

A. Receive dividends
B. Share in assets upon liquidation
C. Acquire additional shares when offered
D. Exercise a proxy vote

76. Which of the following factors does not affect the initial market price of a stock?
A. The company's anticipated future earnings
B. The par value of the stock
C. The current state of the economy
D. The expected dividend rate per share

77. If an investment firm underwrites a stock issue, the

 A. Risk of being unable to sell the shares stays with the issuing corporation.
B. Corporation obtains cash immediately from the investment firm.
C. Investment firm has guaranteed profits on the sale of the stock.
D. Issuance of stock is likely to be directly to creditors.

78. The par value of a stock

A. Is legally significant.
B. Reflects the most recent market price.
C. Is selected by the SEC.
D. Is indicative of the worth of the stock.

79. A corporation has the following account balances: Common stock, Php1 par value,
Php30,000; Paid-in Capital in Excess of Par Value, Php700,000. Based on this
information, the
A. Legal capital is Php730,000.
B. Number of shares issued are 30,000.
C. Number of shares outstanding are 730,000.
D. Average price per share issued is Php2.43.

80. The authorized stock of a corporation

A. Only reflects the initial capital needs of the company.
B. Is indicated in its by-laws.
C. Is indicated in its charter.
D. Must be recorded in a formal accounting entry.

81. If Wayne Company issues 2,000 shares of Php5 par value common stock for Php160,000,
the account
A. Common Stock will be credited for Php160,000.
B. Paid-In Capital in Excess of Par Value will be credited for Php10,000.
C. Paid-In Capital in Excess of Par Value will be credited for Php150,000.
D. Cash will be debited for Php150,000.

82. If common stock is issued for an amount greater than par value, the excess should be
credited to
A. Cash
B. Retained Earnings
C. Paid-in Capital in Excess of Par Value
D. Legal Capital

83. If stock is issued for a noncash asset, the asset should be recorded on the books of the
corporation at
A. Fair market value
B. Cost
C. Zero
D. A nominal amount

84. If stock is issued for less than par value, the account
A. Paid-In Capital in Excess of Par Value is credited.
B. Paid-In Capital in Excess of Par Value is debited if a debit balance exists in the
account.
C. Paid-In Capital in Excess of Par Value is debited if a credit balance exists in the
account.
D. Retained Earnings is credited.

85. The sale of common stock below par

A. Is a common occurrence in most states.
B. Is not permitted in most states.
C. Is a practice that most shareholders encourage.
D. Requires that a liability be recorded for the difference between the sales price and the
par value of the shares.

86. Paid-In Capital in Excess of Stated Value

 A. Is credited when no-par stock does not have a stated value.
B. Is reported as part of paid-in capital on the balance sheet.
C. Represents the amount of legal capital.
D. Normally has a debit balance.

87. Carey Company is a publicly held corporation whose Php1 par value stock is actively
traded at Php20 per share. The company issued 3,000 shares of stock to acquire land
recently advertised at Php45,000. When recording this transaction, Carey Company will
A. Debit Land for Php45,000.
B. Credit Common Stock for Php60,000.
C. Debit Land for Php60,000.
D. Credit Paid-In Capital in Excess of Par Value for Php42,000.

88. Renfro Company issued 2,000 shares of its Php5 par value common stock in payment of
their attorney's bill of Php15,000. The bill was for services performed in helping the
company incorporate. Renfro should record this transaction by debiting
A. Legal Expense for Php10,000.
B. Legal Expense for Php15,000.
C. Organization Expense for Php10,000.
D. Organization Expense for Php15,000.

89. Which of the following represents the largest number of common shares?
A. Treasury shares
B. Issued shares
C. Outstanding shares
D. Authorized shares

90. Treasury stock is

A. Stock issued by the U.S. Treasury Department.
B. Stock purchased by a corporation and held as an investment in its treasury.
C. Corporate stock issued by the treasurer of a company.
D. A corporation's own stock which has been reacquired but not cancelled.

91. The acquisition of treasury stock by a corporation

A. Increases its total assets and total stockholders' equity.
B. Decreases its total assets and total stockholders' equity.
C. Has no effect on total assets and total stockholders' equity.
D. Requires that a gain or loss be recognized on the income statement.

92. Treasury stock should be reported in the financial statements of a corporation as

A. An investment.
B. A liability.
C. A deduction from total paid-in capital.
D. A deduction from total paid-in capital and retained earnings.

93. A company would not acquire treasury stock

A. In order to reissue shares to officers.
B. As an asset investment.
C. In order to increase trading of the company's stock.
D. To have additional shares available to use in acquisitions of other companies.

94. Treasury Stock is

A. A contra asset account.
B. A retained earnings account.
C. An asset account.
D. A contra stockholders' equity account.

95. Three thousand shares of treasury stock of Olsen, Inc., previously acquired at Php16 per
share, are sold at Php24 per share. The entry to record this transaction will include a
A. Credit to Treasury Stock for Php72,000.
B. Debit to Paid-In Capital from Treasury Stock for Php24,000.
C. Debit to Treasury Stock for Php48,000.
 D. Credit to Paid-In Capital from Treasury Stock for Php24,000.

96. Sims Company originally issued 2,000 shares of Php10 par value common stock for
Php60,000 (Php30 per share). Sims subsequently purchases 200 shares of treasury stock
for Php27 per share and sells the 200 shares of treasury stock for Php29 per share. In the
entry to record the sale, there will be a
A. Credit to Common Stock for Php5,400.
B. Credit to Treasury Stock for Php2,000.
C. Debit to Paid-In Capital from Treasury Stock of Php6,000.
D. Credit to Paid-In Capital from Treasury Stock for Php400.

97. Which of the following is not a right or preference associated with preferred stock?
A. The right to vote
B. First claim to dividends
C. Preference to corporate assets in case of liquidation
D. To receive dividends in arrears before common stockholders receive dividends

Use the following information for questions 98-99.

Belle Corporation issues 6,000 shares of Php50 par value preferred stock for cash at
Php60 per share.

98. The entry to record the transaction will consist of a debit to Cash for Php360,000 and a
credit or credits to
A. Preferred Stock Php360,000.
B. Preferred Stock Php300,000 and Paid-in Capital in Excess of Par Value-Preferred
Stock Php60,000.
C. Preferred Stock Php300,000 and Retained Earnings Php60,000.
D. Paid-in Capital from Preferred Stock Php360,000.

99. In the stockholders' equity section, the effects of the transaction above will be reported
A. Entirely within the capital stock section.
B. Entirely within the additional paid-in capital section.
C. Under both the capital stock and additional paid-in capital sections.
D. Entirely under the retained earnings section.

100. Dividends in arrears on cumulative preferred stock

A. Never have to be paid, even if common dividends are paid.
B. Must be paid before common stockholders can receive a dividend.
C. Should be recorded as a current liability until they are paid.
D. Enables the preferred stockholders to share equally in corporate earnings with the
common stockholders.

101. Dividends in arrears on cumulative preferred stock

A. Are considered to be a non-current liability.
B. Are considered to be a current liability.
C. Only occur when preferred dividends have been declared.
D. Should be disclosed in the notes to the financial statements.

102. Which one of the following is not necessary in order for a corporation to pay a cash
dividend?
A. Adequate cash
B. Approval of stockholders
C. Declaration of dividends by the board of directors
D. Retained earnings

103. The date on which a cash dividend becomes a binding legal obligation is on the
A. Declaration date.
B. Date of record.
C. Payment date.
D. Last day of the fiscal year end.
104. The effect of the declaration of a cash dividend by the board of directors is to
Increase Decrease
A. Stockholders' equity Assets
B. Assets Liabilities
C. Liabilities Stockholders' equity
D. Liabilities Assets

105. The cumulative effect of the declaration and payment of a cash dividend on a
company's financial statements is to
A. Decrease total liabilities and stockholders' equity.
B. Increase total expenses and total liabilities.
C. Increase total assets and stockholders' equity.
D. Decrease total assets and stockholders' equity.

106. Common Stock Dividends Distributable is classified as

A. An asset account
B. A stockholders' equity account
C. An expense account
D. A liability account

SOLUTIONS: