Reference no: EM132684738

Problem 1: If we see a pension liability on a company's balance sheet, this means the pension plan is overfunded.

• True
• False

Problem 2: Under current U.S. GAAP, liabilities related to operating lease obligations are shown on the balance sheet.

• True
• False

Problem 3: When a company grants stock options to employees, the journal entry to record the transaction will cause reported 'Net Income' to decrease.

• True
• False

Problem 4: Torres Inc. issues 40,000 shares of its $0.05 par value common stock for $70 per share. The journal entry to record the stock issuance will include a:

Option 1: Credit to Additional Paid in Capital of $2,798,000.

Option 2: Credit to Cash of $2,800,000.

Option 3: Credit to Common Stock of $2,800,000.

Option 4: Debit to Common Stock of $2,000.

Problem 5: The journal entry to record a stock dividend causes the Common Stock account to increase.

• True
• False