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CPA FAR > Transaction Effect on OE and RE > Flashcards

Transaction Effect on OE and RE Flashcards

1
Q

Issue Stock at Par

A

OE-Increase
RE -No effect

Increases contributed capital
J/E
Db Cash
Cr Stock

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2
Q

Issue Stock > Par

A

OE- Increase
RE -No effect

Increase contributed capital
J/E
Db Cash
  Cr Stock
  Cr APIC
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3
Q

Purchase T stock - cost method

A

OE - Decrease
RE - No effect

Reduces contributed capital
J/E
Db Stock
Cr Cash

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4
Q

Reissue T stock above cost - cost method

A

OE - Increase
RE - No effect

Increases contributed capital
J/E
Db Cash
  Cr Stock
  Cr APIC
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5
Q

Declare cash div

A

OE - Decrease
RE - Decrease

Reduces retained earnings, which also reduces OE.
J/E
Db RE
Cr Div. payable

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6
Q

Pay cash dividends declared

A

OE - No effect
RE - No effect

RE & OE already reduced from declaration.
J/E
Db Div payable
Cr Cash

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7
Q

Declare property dividend

A

OE - Decrease
RE - Decrease

Decreases both OE accounts (RE & APIC)
Db Land
Cr Retained Earnings
Cr APIC - if BV less than Mkt

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8
Q

Accounting principal change

A

OE - Increase or Decrease

RE - Increase or Decrease

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9
Q

Recognize prior period adjustment

A

OE - Increase or Decrease

RE - Increase or Decrease

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10
Q

Declare small stock dividend

A

OE - No effect
RE - Decrease

Decreases RE
J/E
Db RE
  Cr Stock
  Cr APIC - if price > par
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11
Q

Recognize stock issue costs

A

OE - Decrease
RE - No effect

Decreases APIC
J/E
Db Cash
  Cr Stock
  Cr APIC
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12
Q

Issue stock rights for services, ignore tax effects

A

OE - No effect
RE - Decrease

Reduces OE
J/E
Db Service expenses
Cr stock rights outstanding

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13
Q

Stock rights issued for services exercised

A

OE - Increase
RE - No effect

Increases paid in cap
J/E
Db Cash
Db Rights outstanding
  Cr Stock
  Cr APIC if ex. price > par
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14
Q

Call preferred stock for < BV

A

OE - Decrease
RE - No effect

Decreases paid in cap
J/E
Db Stock
Db APIC
  Cr Cash
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15
Q

Call preferred stock for > BV

A

OE -Decrease
RE -Decrease

Decrease paid in cap and RE.
J/E
Db Stock
Db APIC
Db RE
  Cr Cash
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16
Q

Appropriate RE

A

OE - no effect
RE - no effect

No reduction to total RE
Db RE
Cr RE, app

17
Q

Retained earnings restriction

A

OE - no effect
RE - no effect

No reduction to total RE
J/E
Db RE
Cr RE, app

18
Q

Stock split

A

OE - no effect

RE - no effect

19
Q

Net effect of quasi-reorg - asses written down, common stock used to absorb deficit

A

OE - decrease

RE - increase

20
Q

Recognize compensation expenses on stock options - fair value method, ignore tax effects

A

OE - no effect

RE - decrease

21
Q

Stock options exercised - FV method

A

OE - Increase

RE - no effect

22
Q

Recognize compensation expense on stock appreciation rights plan payable in cash

A

OE - decrease

RE - decrease

23
Q

Report dividend in arrears

A

OE - no effect

RE - no effect

24
Q

Owners equity

A

Retained earnings + contributed capital

CPA FAR (20 decks)

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