The effect of the declaration of a cash dividend by the board of directors is to

Current maturities of long-term debt refers to the amount of interest on a note payable that must be paid in the current year.

True

False

A current liability must be paid out of current earnings.

True

False

Which one of the following events would not require a journal entry on a corporation's books?

2% stock dividend.

$1 per share cash dividend.

2-for-1 stock split.

100% stock dividend.

A 3-for-1 common stock split will increase total stockholders' equity but reduce the par or stated value per share of common stock.

True

False

The effect of the declaration of a cash dividend by the board of directors is to

Increase

Decrease

Liabilities Assets

Liabilities Stockholders' equity

Stockholders' equity Assets

Assets Liabilities

When closing entries are prepared, each income statement account is closed directly to retained earnings.

When closing entries are prepared, each income statement account is closed directly to retained earnings.

False

True

A liability—revenue account relationship exists with an unearned rent revenue adjusting entry.

False

True

The preparation of adjusting entries is:

straightforward because the accounts that need adjustment will be out of balance.

needed to ensure that the expense recognition principle is followed.

only required for accounts that do not have a normal balance.

optional when financial statements are prepared.

Balances for each of the following accounts appear in an adjusted trial balance

Balances for each of the following accounts appear in an adjusted trial balance. Identify each as (a) asset, (b) liability, (c) revenue, or (d) expense.

1. Accounts Receivable
2. Equipment
3. Fees Earned
4. Insurance Expense
5. Prepaid Advertising
6. Prepaid Rent
7. Rent Revenue
8. Salary Expense
9. Salary Payable
10. Supplies
11. Supplies Expense
12. Unearned Rent


Answer:
a. Asset: 1, 2, 5, 6, 10
b. Liability: 9, 12
c. Revenue: 3, 7
d. Expense: 4, 8, 11