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If a corporation grants a stock option to an employee on July

If a corporation grants a stock option to an employee on July 1, 20x7, that allows the employee to purchase stock at a price substantially below the market value existing on July 1, 20x7, an element of compensation expense should be recorded on the corporation's books or reported in the notes to the financial statements.

 

 

22.Underwriters typically charge 5 percent of the selling price to guarantee the sale of initial public offerings of stock.

 

 

23.A dividend that represents a return to the stockholders of a part of their paid-in capital rather than a distribution out of retained earnings is called a liquidating dividend.

 

 

24.Cash dividends become a liability of a corporation on the ex-dividend date.

 

 

25.The declaration of a cash dividend causes an increase in a corporation's liabilities on the record date.

 

 

26.A liquidating dividend is usually paid when a company is going out of business or reducing its operations.

 

 

27.No entry is required on the record date for a cash dividend.

 

 

 

 

 

28.Dividends Payable is closed to Retained Earnings at the end of the period.

 

 

29.Start-up and organization costs should be amortized over a period of twenty years.

 

 

30.The entry required to record start-up and organization costs will cause a decrease in net income for the period.

Jan 10 2020 View more View Less

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