11) A prior period adjustment would be necessary when:
A) a stock dividend is declared.
B) a stock dividend is paid.
C) depreciation expense was understated the prior year.
D) a cash dividend is declared.
12) A prior period adjustment for depreciation would affect what account in the stockholders' equity section?
A) Common Stock
B) Paid-in Capital in Excess of Par Value–Common
C) Retained Earnings
D) Appropriations
13) At the end of the accounting cycle, net income will be closed into:
A) Treasury Stock.
B) Paid-in Capital.
C) Cash.
D) Retained Earnings.
14) Appropriations to retained earnings is:
A) recorded as an contra-asset.
B) disclosed in the notes to the financial statements.
C) recorded as a contra-liability.
D) a contra-stockholders' equity.
15) Rick's Internet Corporation's balance in Retained Earnings is $50,000. The board of directors directs that $25,000 be appropriated for future business expansion. This will cause total retained earnings to:
A) remain at $50,000.
B) increase by $25,000.
C) decrease by $25,000.
D) increase or decrease $25,000, as determined by the board.
16) Changes in retained earnings result from effects of prior period adjustments, net income or loss, or dividends paid.
17) Appropriations of retained earnings are voted upon by the board of directors.
18) An appropriation to retained earnings reduces total shareholders' equity.
19) Most companies report restrictions of Retained Earnings by using a footnote to the Retained Earnings account.
20) A prior period adjustment is corrected to the ending balance of Retained Earnings.
