Debt Covenant Obligations - CPA Financial Accounting and Reporting (FAR)
Card 1 of 24
The board of Directors for the Steak Corporation declares a $3 per share cash dividend on November 1, Year 5, to be paid to owners on record at November 15, Year 5. Checks will be distributed on November 29, Year 5. Prior to declaring the dividend, Steak Corporation has 150,000 shares outstanding and held 25,000 shares of treasury stock. On November 23, Year 5, Steak bought back an additional 15,000 shares of treasury stock. On what date should Steak reduce their working capital for this dividend?
The board of Directors for the Steak Corporation declares a $3 per share cash dividend on November 1, Year 5, to be paid to owners on record at November 15, Year 5. Checks will be distributed on November 29, Year 5. Prior to declaring the dividend, Steak Corporation has 150,000 shares outstanding and held 25,000 shares of treasury stock. On November 23, Year 5, Steak bought back an additional 15,000 shares of treasury stock. On what date should Steak reduce their working capital for this dividend?
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Working capital is reduced on the date the dividend is declared.
Working capital is reduced on the date the dividend is declared.
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A company issues 15,000 shares of its $10 par value common stock at $18 per share. Later, 3,000 of these shares are bough back as treasury stock at a cost of $20 per share. Which of the following is true?
A company issues 15,000 shares of its $10 par value common stock at $18 per share. Later, 3,000 of these shares are bough back as treasury stock at a cost of $20 per share. Which of the following is true?
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The impact on total stockholder's equity will be the same no matter what method is used to account for the treasury stock purchase. However, each method will impact accounts with stockholder's equity differently.
The impact on total stockholder's equity will be the same no matter what method is used to account for the treasury stock purchase. However, each method will impact accounts with stockholder's equity differently.
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The Marine Company has 200,000 common shares issued and outstanding. The stock was issued several years ago at a price above the $20 par value per share. During the current year, the board of directors declared a 30% stock dividend when the price of the shares was $45 per share. What reduction is recorded in the amount of retained earnings as a result of this dividend?
The Marine Company has 200,000 common shares issued and outstanding. The stock was issued several years ago at a price above the $20 par value per share. During the current year, the board of directors declared a 30% stock dividend when the price of the shares was $45 per share. What reduction is recorded in the amount of retained earnings as a result of this dividend?
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Because this is considered a large stock dividend, retained earnings must be adjusted for this stock dividend. The entry is calculated using the number of shares outstanding and the par value. Thus, the debit to retained earnings is 200K shares x 30% x $20 per share.
Because this is considered a large stock dividend, retained earnings must be adjusted for this stock dividend. The entry is calculated using the number of shares outstanding and the par value. Thus, the debit to retained earnings is 200K shares x 30% x $20 per share.
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Of the following is not a criteria for recognizing a liability associated with exit or disposal activities?
Of the following is not a criteria for recognizing a liability associated with exit or disposal activities?
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An entity's commitment to an exit or disposal plan, is not enough to result in liability recognition.
An entity's commitment to an exit or disposal plan, is not enough to result in liability recognition.
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At year end, ABC company estimates that its employees have earned vacation pay of $50,000. Employees will receive their vacation pay in year 2. Should ABC accrue a liability at year end if the rights to this compensation accumulated over time or if the rights are vested?
At year end, ABC company estimates that its employees have earned vacation pay of $50,000. Employees will receive their vacation pay in year 2. Should ABC accrue a liability at year end if the rights to this compensation accumulated over time or if the rights are vested?
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Employees compensation for future absences should be accrued if: Services have already been rendered, the obligation relates to vested or accumulated rights, the amount can be reasonable estimated, and payment is probable.
Employees compensation for future absences should be accrued if: Services have already been rendered, the obligation relates to vested or accumulated rights, the amount can be reasonable estimated, and payment is probable.
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A bond that matures in installments is known as a:
A bond that matures in installments is known as a:
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Serial bonds do not all mature at the same date and mature in installments. Debentures are unsecured bonds, term bonds have a single maturity date, and a bond sinking fund is used to pay off a bond at maturity.
Serial bonds do not all mature at the same date and mature in installments. Debentures are unsecured bonds, term bonds have a single maturity date, and a bond sinking fund is used to pay off a bond at maturity.
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The board of Directors for the Steak Corporation declares a $3 per share cash dividend on November 1, Year 5, to be paid to owners on record at November 15, Year 5. Checks will be distributed on November 29, Year 5. Prior to declaring the dividend, Steak Corporation has 150,000 shares outstanding and held 25,000 shares of treasury stock. On November 23, Year 5, Steak bought back an additional 15,000 shares of treasury stock. On what date should Steak reduce their working capital for this dividend?
The board of Directors for the Steak Corporation declares a $3 per share cash dividend on November 1, Year 5, to be paid to owners on record at November 15, Year 5. Checks will be distributed on November 29, Year 5. Prior to declaring the dividend, Steak Corporation has 150,000 shares outstanding and held 25,000 shares of treasury stock. On November 23, Year 5, Steak bought back an additional 15,000 shares of treasury stock. On what date should Steak reduce their working capital for this dividend?
Tap to reveal answer
Working capital is reduced on the date the dividend is declared.
Working capital is reduced on the date the dividend is declared.
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A company issues 15,000 shares of its $10 par value common stock at $18 per share. Later, 3,000 of these shares are bough back as treasury stock at a cost of $20 per share. Which of the following is true?
A company issues 15,000 shares of its $10 par value common stock at $18 per share. Later, 3,000 of these shares are bough back as treasury stock at a cost of $20 per share. Which of the following is true?
Tap to reveal answer
The impact on total stockholder's equity will be the same no matter what method is used to account for the treasury stock purchase. However, each method will impact accounts with stockholder's equity differently.
The impact on total stockholder's equity will be the same no matter what method is used to account for the treasury stock purchase. However, each method will impact accounts with stockholder's equity differently.
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The Marine Company has 200,000 common shares issued and outstanding. The stock was issued several years ago at a price above the $20 par value per share. During the current year, the board of directors declared a 30% stock dividend when the price of the shares was $45 per share. What reduction is recorded in the amount of retained earnings as a result of this dividend?
The Marine Company has 200,000 common shares issued and outstanding. The stock was issued several years ago at a price above the $20 par value per share. During the current year, the board of directors declared a 30% stock dividend when the price of the shares was $45 per share. What reduction is recorded in the amount of retained earnings as a result of this dividend?
Tap to reveal answer
Because this is considered a large stock dividend, retained earnings must be adjusted for this stock dividend. The entry is calculated using the number of shares outstanding and the par value. Thus, the debit to retained earnings is 200K shares x 30% x $20 per share.
Because this is considered a large stock dividend, retained earnings must be adjusted for this stock dividend. The entry is calculated using the number of shares outstanding and the par value. Thus, the debit to retained earnings is 200K shares x 30% x $20 per share.
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Of the following is not a criteria for recognizing a liability associated with exit or disposal activities?
Of the following is not a criteria for recognizing a liability associated with exit or disposal activities?
Tap to reveal answer
An entity's commitment to an exit or disposal plan, is not enough to result in liability recognition.
An entity's commitment to an exit or disposal plan, is not enough to result in liability recognition.
← Didn't Know|Knew It →
At year end, ABC company estimates that its employees have earned vacation pay of $50,000. Employees will receive their vacation pay in year 2. Should ABC accrue a liability at year end if the rights to this compensation accumulated over time or if the rights are vested?
At year end, ABC company estimates that its employees have earned vacation pay of $50,000. Employees will receive their vacation pay in year 2. Should ABC accrue a liability at year end if the rights to this compensation accumulated over time or if the rights are vested?
Tap to reveal answer
Employees compensation for future absences should be accrued if: Services have already been rendered, the obligation relates to vested or accumulated rights, the amount can be reasonable estimated, and payment is probable.
Employees compensation for future absences should be accrued if: Services have already been rendered, the obligation relates to vested or accumulated rights, the amount can be reasonable estimated, and payment is probable.
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A bond that matures in installments is known as a:
A bond that matures in installments is known as a:
Tap to reveal answer
Serial bonds do not all mature at the same date and mature in installments. Debentures are unsecured bonds, term bonds have a single maturity date, and a bond sinking fund is used to pay off a bond at maturity.
Serial bonds do not all mature at the same date and mature in installments. Debentures are unsecured bonds, term bonds have a single maturity date, and a bond sinking fund is used to pay off a bond at maturity.
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The board of Directors for the Steak Corporation declares a $3 per share cash dividend on November 1, Year 5, to be paid to owners on record at November 15, Year 5. Checks will be distributed on November 29, Year 5. Prior to declaring the dividend, Steak Corporation has 150,000 shares outstanding and held 25,000 shares of treasury stock. On November 23, Year 5, Steak bought back an additional 15,000 shares of treasury stock. On what date should Steak reduce their working capital for this dividend?
The board of Directors for the Steak Corporation declares a $3 per share cash dividend on November 1, Year 5, to be paid to owners on record at November 15, Year 5. Checks will be distributed on November 29, Year 5. Prior to declaring the dividend, Steak Corporation has 150,000 shares outstanding and held 25,000 shares of treasury stock. On November 23, Year 5, Steak bought back an additional 15,000 shares of treasury stock. On what date should Steak reduce their working capital for this dividend?
Tap to reveal answer
Working capital is reduced on the date the dividend is declared.
Working capital is reduced on the date the dividend is declared.
← Didn't Know|Knew It →
A company issues 15,000 shares of its $10 par value common stock at $18 per share. Later, 3,000 of these shares are bough back as treasury stock at a cost of $20 per share. Which of the following is true?
A company issues 15,000 shares of its $10 par value common stock at $18 per share. Later, 3,000 of these shares are bough back as treasury stock at a cost of $20 per share. Which of the following is true?
Tap to reveal answer
The impact on total stockholder's equity will be the same no matter what method is used to account for the treasury stock purchase. However, each method will impact accounts with stockholder's equity differently.
The impact on total stockholder's equity will be the same no matter what method is used to account for the treasury stock purchase. However, each method will impact accounts with stockholder's equity differently.
← Didn't Know|Knew It →
The Marine Company has 200,000 common shares issued and outstanding. The stock was issued several years ago at a price above the $20 par value per share. During the current year, the board of directors declared a 30% stock dividend when the price of the shares was $45 per share. What reduction is recorded in the amount of retained earnings as a result of this dividend?
The Marine Company has 200,000 common shares issued and outstanding. The stock was issued several years ago at a price above the $20 par value per share. During the current year, the board of directors declared a 30% stock dividend when the price of the shares was $45 per share. What reduction is recorded in the amount of retained earnings as a result of this dividend?
Tap to reveal answer
Because this is considered a large stock dividend, retained earnings must be adjusted for this stock dividend. The entry is calculated using the number of shares outstanding and the par value. Thus, the debit to retained earnings is 200K shares x 30% x $20 per share.
Because this is considered a large stock dividend, retained earnings must be adjusted for this stock dividend. The entry is calculated using the number of shares outstanding and the par value. Thus, the debit to retained earnings is 200K shares x 30% x $20 per share.
← Didn't Know|Knew It →
Of the following is not a criteria for recognizing a liability associated with exit or disposal activities?
Of the following is not a criteria for recognizing a liability associated with exit or disposal activities?
Tap to reveal answer
An entity's commitment to an exit or disposal plan, is not enough to result in liability recognition.
An entity's commitment to an exit or disposal plan, is not enough to result in liability recognition.
← Didn't Know|Knew It →
At year end, ABC company estimates that its employees have earned vacation pay of $50,000. Employees will receive their vacation pay in year 2. Should ABC accrue a liability at year end if the rights to this compensation accumulated over time or if the rights are vested?
At year end, ABC company estimates that its employees have earned vacation pay of $50,000. Employees will receive their vacation pay in year 2. Should ABC accrue a liability at year end if the rights to this compensation accumulated over time or if the rights are vested?
Tap to reveal answer
Employees compensation for future absences should be accrued if: Services have already been rendered, the obligation relates to vested or accumulated rights, the amount can be reasonable estimated, and payment is probable.
Employees compensation for future absences should be accrued if: Services have already been rendered, the obligation relates to vested or accumulated rights, the amount can be reasonable estimated, and payment is probable.
← Didn't Know|Knew It →
A bond that matures in installments is known as a:
A bond that matures in installments is known as a:
Tap to reveal answer
Serial bonds do not all mature at the same date and mature in installments. Debentures are unsecured bonds, term bonds have a single maturity date, and a bond sinking fund is used to pay off a bond at maturity.
Serial bonds do not all mature at the same date and mature in installments. Debentures are unsecured bonds, term bonds have a single maturity date, and a bond sinking fund is used to pay off a bond at maturity.
← Didn't Know|Knew It →
The board of Directors for the Steak Corporation declares a $3 per share cash dividend on November 1, Year 5, to be paid to owners on record at November 15, Year 5. Checks will be distributed on November 29, Year 5. Prior to declaring the dividend, Steak Corporation has 150,000 shares outstanding and held 25,000 shares of treasury stock. On November 23, Year 5, Steak bought back an additional 15,000 shares of treasury stock. On what date should Steak reduce their working capital for this dividend?
The board of Directors for the Steak Corporation declares a $3 per share cash dividend on November 1, Year 5, to be paid to owners on record at November 15, Year 5. Checks will be distributed on November 29, Year 5. Prior to declaring the dividend, Steak Corporation has 150,000 shares outstanding and held 25,000 shares of treasury stock. On November 23, Year 5, Steak bought back an additional 15,000 shares of treasury stock. On what date should Steak reduce their working capital for this dividend?
Tap to reveal answer
Working capital is reduced on the date the dividend is declared.
Working capital is reduced on the date the dividend is declared.
← Didn't Know|Knew It →
A company issues 15,000 shares of its $10 par value common stock at $18 per share. Later, 3,000 of these shares are bough back as treasury stock at a cost of $20 per share. Which of the following is true?
A company issues 15,000 shares of its $10 par value common stock at $18 per share. Later, 3,000 of these shares are bough back as treasury stock at a cost of $20 per share. Which of the following is true?
Tap to reveal answer
The impact on total stockholder's equity will be the same no matter what method is used to account for the treasury stock purchase. However, each method will impact accounts with stockholder's equity differently.
The impact on total stockholder's equity will be the same no matter what method is used to account for the treasury stock purchase. However, each method will impact accounts with stockholder's equity differently.
← Didn't Know|Knew It →