Question

Please fill in the blanks.

6. ___ _________ may be declared and paid in cash or stock.

7. Net income kept in the business and not paid in dividends goes into the

______________________________ account on the balance sheet.

8. In preparing a statement of cash flows, an increase in the Common Stock and Treasury

Stock accounts during a period would be a ___________________ activity.

9. A sign of distress a company may experience before bankruptcy is _________.

Please mark “T” for true or “F” for false in space next to each statement.

10. ____ A $20,000, 8%, 9-month note payable requires an interest payment of $1,200 at

maturity.   

11. ____ The par value of common stock must always be equal to its market value on the date

the stock is issued.

12. ____ Paid-in capital is the amount paid in to the corporation by stockholders in exchange

for shares of ownership.

Answer 1

6. Dividends may be declared and paid in cash or stock.

7. Net income kept in the business and not paid in dividends goes into the retained earnings account on the balance sheet.

8. In preparing a statement of cash flows, an increase in the Common Stock and Treasury Stock accounts during a period would be a cash flow from Financing activity.

9. A sign of distress a company may experience before bankruptcy is Financial distress

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