Question 1

The declaration and payment of a cash or property dividend requires:

Accepted Answer

A) the distribution of a current asset. 
B) an appropriation of retained earnings. 
C) a reduction of both retained earnings and assets. 
D) a decrease in retained earnings and a change in contributed (paid-in)capital. 
A) the distribution of a current asset. 
B) an appropriation of retained earnings. 
C) a reduction of both retained earnings and assets. 
D) a decrease in retained earnings and a change in contributed (paid-in)capital.

Question 2

Share capital may be classified primarily as:

Accepted Answer

A) Par Value, Common; Stated Value Common; or No-par, Preferred. 
B) Par Value, Common; or No- par, Preferred. 
C) No-par, Common; or Par Value, Preferred. 
D) Par Value, Common; No-par, Common; Par Value, Preferred; or No-par, Preferred. 
A) Par Value, Common; Stated Value Common; or No-par, Preferred. 
B) Par Value, Common; or No- par, Preferred. 
C) No-par, Common; or Par Value, Preferred. 
D) Par Value, Common; No-par, Common; Par Value, Preferred; or No-par, Preferred.

Question 3

Under the single transaction method, the difference between the cost of treasury stock and a subsequent higher selling price of the treasury stock should be credited to:

Accepted Answer

A) Gain from treasury stock transaction. 
B) Share capital. 
C) Retained earnings. 
D) Contributed capital. 
A) Gain from treasury stock transaction. 
B) Share capital. 
C) Retained earnings. 
D) Contributed capital.

Question 4

The December 31, 2016, the balance sheet of TXY reflected the following:   Assume the company sold all of the assets at December 31, 2016, at market value for cas paid off the liabilities and distributed all of the remaining cash to the shareholders.The amount of cash per share that each common shareholder would receive would be:

Accepted Answer

A) $4.47 
B) $5.93 
C) $8.27 
D) $6.07 
A) $4.47 
B) $5.93 
C) $8.27 
D) $6.07

Question 5

Owners' equity must equal the:

Accepted Answer

A) Total contributed capital plus retained earnings less liabilities. 
B) Sum of the share capital account balances plus the total contributed capital in excess of par (or stated value). 
C) Total contributed capital less total retained earnings. 
D) Total assets minus total liabilities. 
A) Total contributed capital plus retained earnings less liabilities. 
B) Sum of the share capital account balances plus the total contributed capital in excess of par (or stated value). 
C) Total contributed capital less total retained earnings. 
D) Total assets minus total liabilities.

Question 6

If preferred shares are callable, then:

Accepted Answer

A) There cannot be dividends in arrears. 
B) The shareholders can exchange the preferred shares owned for common shares. 
C) The corporation may, at its option, purchase the preferred shares for a specified cash price. 
D) The preferred shareholder can turn the preferred shares in for a specified cash price. 
A) There cannot be dividends in arrears. 
B) The shareholders can exchange the preferred shares owned for common shares. 
C) The corporation may, at its option, purchase the preferred shares for a specified cash price. 
D) The preferred shareholder can turn the preferred shares in for a specified cash price.

Question 7

Dividends in arrears on noncumulative preferred shares must be paid before dividends can be paid to the common shareholders.

Accepted Answer

A) True 
 B)False

Question 8

ABC made the following entry to record the issuance of a dividend:   ABC must have declared a:

Accepted Answer

A) Property dividend. 
B) Large stock dividend. 
C) stock split. 
D) Small stock dividend. 
A) Property dividend. 
B) Large stock dividend. 
C) stock split. 
D) Small stock dividend.

Question 9

Which of the following dividends does not reduce retained earnings?

Accepted Answer

A) Property dividend. 
B) Scrip dividend. 
C) Liquidating dividend. 
D) Stock dividend. 
E) Cash dividend. 
A) Property dividend. 
B) Scrip dividend. 
C) Liquidating dividend. 
D) Stock dividend. 
E) Cash dividend.

Question 10

During 2014, BV sold and issued the following shares for $20,000 cash: Common shares, 600 shares (current market price per share, $23.50). Preferred shares, 200 shares (no current market price available); original issue price, three
Years earlier, $22 per share.
The total issue price of $20,000 that should be apportioned to the preferred shares is:

Accepted Answer

A) $4,000 
B) $8,000 
C) $4,400 
D) $5,900 
A) $4,000 
B) $8,000 
C) $4,400 
D) $5,900

Question 11

The Treasury Share account is debited and credited at the cost of the shares repurchased.

Accepted Answer

A) True 
 B)False

Question 12

A company must follow IFRS if either its debt or equity instruments are publicly traded.

Accepted Answer

A) True 
 B)False

Question 13

Identify the missing component (X)in the following equation: Retained earnings, ending balance = Net income to date + prior period adjustments to date - cash and property dividends to date - X

Accepted Answer

A) Stock dividends to date. 
B) Net unrealized gain or loss on securities available for sale. 
C) Stock dividends and splits to date. 
D) Stock splits to date. 
A) Stock dividends to date. 
B) Net unrealized gain or loss on securities available for sale. 
C) Stock dividends and splits to date. 
D) Stock splits to date.

Question 14

XY Company had the following shareholder equity: Common shares outstanding, 10,000; average issue price, $115; current market price, $140.Shares sold on a stock subscription basis are not issued until the subscription price is collected in full.Recording a declaration of a 10 percent stock dividend in conformity with generally accepted accounting principles would change retained earnings:

Accepted Answer

A) On the basis of an arbitrary value of shares. 
B) By 10 percent of its balance before the dividend. 
C) On the basis of the market value of shares. 
D) On the basis of the average paid-in value of shares. 
A) On the basis of an arbitrary value of shares. 
B) By 10 percent of its balance before the dividend. 
C) On the basis of the market value of shares. 
D) On the basis of the average paid-in value of shares.

Question 15

At the date of the financial statements, common shares issued would exceed common shares outstanding as a result of the:

Accepted Answer

A) Declaration of a stock dividend. 
B) Purchase of treasury stock. 
C) Payment in full of subscribed shares. 
D) Declaration of a stock split. 
A) Declaration of a stock dividend. 
B) Purchase of treasury stock. 
C) Payment in full of subscribed shares. 
D) Declaration of a stock split.

Question 16

X Corporation owns 15% of the outstanding shares of Z Corporation.The Z stock is distributed to the shareholders of X Corporation as a dividend at its current market value.This is an example of a:

Accepted Answer

A) scrip dividend. 
B) property dividend. 
C) cash dividend. 
D) stock dividend. 
A) scrip dividend. 
B) property dividend. 
C) cash dividend. 
D) stock dividend.

Question 17

The following owners' equity section of a firm's balance sheet relates to the current year (end-of-year data):   How many common shares are issued?

Accepted Answer

A) 6,000 
B) 7,000 
C) 8,000 
D) There is insufficient information provided to answer the question. 
A) 6,000 
B) 7,000 
C) 8,000 
D) There is insufficient information provided to answer the question.

Question 18

Par value is typically set at a low amount so that the corporation can pay a minimum amount in dividends to the preferred shareholders.

Accepted Answer

A) True 
 B)False

Question 19

When a company's preferred shares are converted to common shares, the common share capital account is credited for the market value of the common shares, with any gain or loss flowing to contributed surplus or retained earnings.

Accepted Answer

A) True 
 B)False

Question 20

When noncash assets are issued as a dividend, those assets should be re-valued as of the:

Accepted Answer

A) Declaration date. 
B) Recording date. 
C) Announcement date. 
D) Issuance date. 
A) Declaration date. 
B) Recording date. 
C) Announcement date. 
D) Issuance date.

The declaration and payment of a cash or property dividend requires:

Share capital may be classified primarily as:

Under the single transaction method, the difference between the cost of treasury stock and a subsequent higher selling price of the treasury stock should be credited to:

Owners' equity must equal the:

If preferred shares are callable, then:

Dividends in arrears on noncumulative preferred shares must be paid before dividends can be paid to the common shareholders.

ABC made the following entry to record the issuance of a dividend: ABC must have declared a:

Which of the following dividends does not reduce retained earnings?

The Treasury Share account is debited and credited at the cost of the shares repurchased.

A company must follow IFRS if either its debt or equity instruments are publicly traded.

Identify the missing component (X)in the following equation: Retained earnings, ending balance = Net income to date + prior period adjustments to date - cash and property dividends to date - X

At the date of the financial statements, common shares issued would exceed common shares outstanding as a result of the:

X Corporation owns 15% of the outstanding shares of Z Corporation.The Z stock is distributed to the shareholders of X Corporation as a dividend at its current market value.This is an example of a:

The following owners' equity section of a firm's balance sheet relates to the current year (end-of-year data): How many common shares are issued?

Par value is typically set at a low amount so that the corporation can pay a minimum amount in dividends to the preferred shareholders.

When a company's preferred shares are converted to common shares, the common share capital account is credited for the market value of the common shares, with any gain or loss flowing to contributed surplus or retained earnings.

When noncash assets are issued as a dividend, those assets should be re-valued as of the:

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Financial Instruments: Complex Debt and Equity

Corporate Income Tax

Tax Losses

Leases

Post-Employment Benefits

Earnings Per Share

Accounting Changes

Financial Statement Analysis

Filters

Exam 14: Shareholders Equity

The declaration and payment of a cash or property dividend requires:

Share capital may be classified primarily as:

Under the single transaction method, the difference between the cost of treasury stock and a subsequent higher selling price of the treasury stock should be credited to:

Owners' equity must equal the:

If preferred shares are callable, then:

Dividends in arrears on noncumulative preferred shares must be paid before dividends can be paid to the common shareholders.

ABC made the following entry to record the issuance of a dividend: ABC must have declared a:

Which of the following dividends does not reduce retained earnings?

The Treasury Share account is debited and credited at the cost of the shares repurchased.

A company must follow IFRS if either its debt or equity instruments are publicly traded.

Identify the missing component (X)in the following equation: Retained earnings, ending balance = Net income to date + prior period adjustments to date - cash and property dividends to date - X

At the date of the financial statements, common shares issued would exceed common shares outstanding as a result of the:

X Corporation owns 15% of the outstanding shares of Z Corporation.The Z stock is distributed to the shareholders of X Corporation as a dividend at its current market value.This is an example of a:

The following owners' equity section of a firm's balance sheet relates to the current year (end-of-year data): How many common shares are issued?

Par value is typically set at a low amount so that the corporation can pay a minimum amount in dividends to the preferred shareholders.

When a company's preferred shares are converted to common shares, the common share capital account is credited for the market value of the common shares, with any gain or loss flowing to contributed surplus or retained earnings.

When noncash assets are issued as a dividend, those assets should be re-valued as of the:

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Financial Instruments: Complex Debt and Equity

Corporate Income Tax

Tax Losses

Leases

Post-Employment Benefits

Earnings Per Share

Accounting Changes

Financial Statement Analysis

Filters