SOLVED

Learning Objective 22-3 1) Which of the following would generally not need to be approved by the board of directors? A) Issuing capital stock B) Repurchasing capital stock C) Declaration of a Dividend D) Payment of a Dividend 2) Which of the following owners’ equity transactions usually require specific authorization from a company’s board of directors? A) Repurchase of common stock Issuance of common stock Payment of dividends Yes Yes Yes B) Repurchase of common stock Issuance of common stock Payment of dividends Yes Yes No C) Repurchase of common stock Issuance of common stock Payment of dividends No Yes No D) Repurchase of common stock Issuance of common stock Payment of dividends No No Yes 3) When a company maintains its own records of stock transactions and outstanding stock, internal controls must be adequate to ensure that: A) actual owners are recorded in the bylaws. B) the correct amount of dividends is paid to stockholders owning the stock on the dividend record date. C) the correct amount of dividends is paid to stockholders owning the stock on the declaration date. D) actual owners are recorded in the minutes. 4) The amount of time spent verifying owners’ equity is frequently minimal for closely held corporations because: A) these companies are so small that it is not necessary to audit the capital section. B) the few owners all have access to the books so the auditor spends more time on accounts like liabilities, which affect outsiders. C) there are few if any transactions during the year for the capital stock accounts, except for earnings and dividends. D) there is no public interest in these companies. 5) Which of the following types of owners’ equity transactions would not require authorization by the board of directors? A) Issuance of capital stock B) Repurchase of capital stock C) Declaration of dividends D) None of the above 6) The record of the issuance and repurchase of capital stock for the life of the corporation is maintained in the: A) shareholders’ capital stock master file. B) capital stock certificate record. C) schedule of stock owners. D) corporate directory. 7) The record of the outstanding shares at any given time is maintained in the: A) corporate directory. B) stock certificate books. C) schedule of stock owners. D) shareholders’ capital stock master file. 8) When a dividend is declared by the board of directors, the source for determining who should receive dividend checks is the: A) shareholders’ capital stock master file. B) stock certificate books. C) common stock account in the general ledger. D) corporate directory. 9) The authorization of an issuance of capital stock normally includes all but which of the following? A) type of stock to be issued B) number of shares to be issued C) date shares are to be issued D) amount of dividend to be paid on shares issued 10) Any company with stock listed on a securities exchange is required to engage a(n) ________. A) equity analyst B) stock transfer agent C) independent registrar D) equity placement specialist 11) If a company employs a capital stock registrar and/or transfer agent, the registrar or agent, or both,should be requested to confirm directly to the auditor the number of shares of each class of stock: A) surrendered and canceled during the year. B) authorized at the balance sheet date. C) issued and outstanding at the balance sheet date. D) authorized, issued, and outstanding during the year. 12) Which of the following statements is true? A) There is an inverse relationship between the interest and dividends accounts and debt and equity. B) There is no relationship between the interest and dividends accounts and debt and equity. C) There is a direct relationship between the interest and dividends accounts and debt and equity. D) None of the above is true.