Question 1

Total retained earnings include both appropriated and unappropriated retained earnings.

Accepted Answer

A) True 
 B)False

Question 2

Major factors contributing to the growth of the corporate form of business includes all of the following except:

Accepted Answer

A) The facility to accumulate large amounts of resources. 
B) The lack of government regulation. 
C) Easy transferability of ownership. 
D) Limited liability of the shareholders. 
A) The facility to accumulate large amounts of resources. 
B) The lack of government regulation. 
C) Easy transferability of ownership. 
D) Limited liability of the shareholders.

Question 3

Stock splits are often issued primarily to:

Accepted Answer

A) Increase permanent capital. 
B) Decrease the liability for dividends in arrears. 
C) Give the shareholders more voting rights. 
D) Reduce the market price per share. 
A) Increase permanent capital. 
B) Decrease the liability for dividends in arrears. 
C) Give the shareholders more voting rights. 
D) Reduce the market price per share.

Question 4

A company reacquires its own shares during the fiscal year and reports the transaction in the theoretically correct manner.What effect will this transaction have on shareholders' equity and earnings per share, respectively?

Accepted Answer

A) Decrease and increase 
B) Increase and no effect 
C) Decrease and decrease 
D) Increase and decrease 
A) Decrease and increase 
B) Increase and no effect 
C) Decrease and decrease 
D) Increase and decrease

Question 5

The conversion from one type of share to another should be accounted for at:

Accepted Answer

A) Book Value. 
B) Fair Market Value. 
C) A discounted amount. 
D) Book Value or Fair Market Value. 
A) Book Value. 
B) Fair Market Value. 
C) A discounted amount. 
D) Book Value or Fair Market Value.

Question 6

Gains on sale of treasury stock should be credited to:

Accepted Answer

A) Additional contributed capital. 
B) Share capital. 
C) Retained earnings. 
D) Other income. 
A) Additional contributed capital. 
B) Share capital. 
C) Retained earnings. 
D) Other income.

Question 7

ABC had 20,000 shares of treasury common stock, which it purchased for $7 per share.Until now, this was ABC's only treasury stock transaction.The shares were originally sold and issued at $5 per share.ABC uses the single-transaction method.ABC is now selling the treasury shares for $5 per share.The entry to record the resale would include a:

Accepted Answer

A) Debit to common shares for $140,000. 
B) Debit to Retained earnings for $40,000. 
C) Credit to common shares for $100,000. 
D) Credit to Treasury stock for $100,000. 
A) Debit to common shares for $140,000. 
B) Debit to Retained earnings for $40,000. 
C) Credit to common shares for $100,000. 
D) Credit to Treasury stock for $100,000.

Question 8

Dividends are paid when declared.

Accepted Answer

A) True 
 B)False

Question 9

Both preferred and common shares may be cumulative.

Accepted Answer

A) True 
 B)False

Question 10

Preferred shareholders normally have the same voting rights as common shareholders.

Accepted Answer

A) True 
 B)False

Question 11

The owners' equity section of a firm's balance sheet reflects the following at the end of th current year: $6 Preferred shares, 3,000 shares outstanding = $300,000 Common shares, 100,000 outstanding = $500,000
(Matching dividend, if applicable, $.30)
The preferred shares participate up to a maximum of $8 ($2 additional participation).There were two years of dividends in arrears on the preferred shares at the beginning of the current year.If the firm declares $110,000 in dividends at the end of the current year, what portion of that amount is distributed to the common shareholders?

Accepted Answer

A) $60,000 
B) $54,000 
C) $30,000 
D) $50,000 
A) $60,000 
B) $54,000 
C) $30,000 
D) $50,000

Question 12

A property dividend causes a debit to retained earnings equal to the of the property distributed.

Accepted Answer

A) Book value 
B) Original cost 
C) Fair market value 
D) Income tax basis 
A) Book value 
B) Original cost 
C) Fair market value 
D) Income tax basis

Question 13

PQR Inc.had 1,000 common shares outstanding with a par value of $10 per share.There was $20,000 of contributed surplus arising from previous retirements of shares in this class.Assume that half of these shares were retired for $14 per share.The journal entry to record this transaction would include:

Accepted Answer

A) a debit to retained earnings of $40,000. 
B) a credit to retained earnings of $40,000. 
C) a debit to retained earnings of $20,000 and a debit to contributed surplus of $20,000. 
D) an income statement loss of $40,000. 
A) a debit to retained earnings of $40,000. 
B) a credit to retained earnings of $40,000. 
C) a debit to retained earnings of $20,000 and a debit to contributed surplus of $20,000. 
D) an income statement loss of $40,000.

Question 14

The order in which dividends are allocated to common and preferred shares depends upon the provisions in the respective stock contracts.Choose the correct statement regarding this allocation.

Accepted Answer

A) When noncumulative preferred shares are fully participating, the rate of dividends allocated to preferred shares is the ratio of total par of preferred shares outstanding to total par of both classes of shares outstanding. 
B) When 8% cumulative preferred shares are participating to a total of 12%, any arrear dividends are ignored in the allocation since they pertain to a previous year. 
C) When noncumulative preferred shares are not participating, the rate of dividends to common shares are limited to the ratio of total par of common shares outstanding to total par of both classes of shares outstanding. 
D) When 8% noncumulative preferred shares are participating to a total of 12%, the preferred shares must receive all arrear dividends and 12% of total preferred shares par outstanding prior to common shares receiving any dividends. 
A) When noncumulative preferred shares are fully participating, the rate of dividends allocated to preferred shares is the ratio of total par of preferred shares outstanding to total par of both classes of shares outstanding. 
B) When 8% cumulative preferred shares are participating to a total of 12%, any arrear dividends are ignored in the allocation since they pertain to a previous year. 
C) When noncumulative preferred shares are not participating, the rate of dividends to common shares are limited to the ratio of total par of common shares outstanding to total par of both classes of shares outstanding. 
D) When 8% noncumulative preferred shares are participating to a total of 12%, the preferred shares must receive all arrear dividends and 12% of total preferred shares par outstanding prior to common shares receiving any dividends.

Question 15

XV Corporation has 1,000 shares of treasury stock (common shares).It was originally issued at $15 per share and was reacquired at $10 per share.XV Corporation has decided to formally retire these shares; the current market price is $9.The single-transaction method is used.The entry to record the retirement of the shares should include the following:

Accepted Answer

A) Gain on retirement of common shares, $5,000. 
B) Unusual gain, $5,000. 
C) Retained earnings credit, $5,000. 
D) Contributed capital from common share retirement, credit, $5,000. 
A) Gain on retirement of common shares, $5,000. 
B) Unusual gain, $5,000. 
C) Retained earnings credit, $5,000. 
D) Contributed capital from common share retirement, credit, $5,000.

Question 16

Authorized share capital refers to the total number of shares:

Accepted Answer

A) That can be issued in conformity with the corporation's charter. 
B) Outstanding. 
C) Issued, less all treasury shares owned. 
D) Issued. 
A) That can be issued in conformity with the corporation's charter. 
B) Outstanding. 
C) Issued, less all treasury shares owned. 
D) Issued.

Question 17

On July 1, 2019, NDC had outstanding 20,000 common shares, (originally sold at $5 per share); the current quoted market price is $7 per share.The company declared and issued a 10% common stock dividend; however, stock rights for 100 fractional shares were issued (10 shares).The rights currently had a quoted market price of $.80 each.Give the entry to record the dividend.

Accepted Answer

Please see

Question 18

When a company issues to its shareholders some shares of another corporation's stock that currently are held as an investment, the company is issuing a stock dividend.

Accepted Answer

A) True 
 B)False

Question 19

How should a gain from the sale of treasury stock be reflected when using the single transaction method of recording treasury stock transactions?

Accepted Answer

A) As an increase in the amount shown for common stock 
B) As ordinary earnings shown on the income statement 
C) As an extraordinary item shown on the income statement 
D) As contributed capital from treasury stock transactions 
A) As an increase in the amount shown for common stock 
B) As ordinary earnings shown on the income statement 
C) As an extraordinary item shown on the income statement 
D) As contributed capital from treasury stock transactions

Question 20

TTSS Corporation had 1,000 common shares issued and outstanding (sold at $40 each).It then made its first-ever purchase of treasury stock by buying 200 of its own shares for $50 per share.Assume sufficient retained earnings.The entry to record this purchase using the single-transaction method would include:

Accepted Answer

A) dr.treasury stock $10,000 
B) dr.contributed capital from treasury stock transactions $2,000 
C) dr.common shares $8,000 
D) dr.common shares $10,000 
A) dr.treasury stock $10,000 
B) dr.contributed capital from treasury stock transactions $2,000 
C) dr.common shares $8,000 
D) dr.common shares $10,000

Total retained earnings include both appropriated and unappropriated retained earnings.

Major factors contributing to the growth of the corporate form of business includes all of the following except:

Stock splits are often issued primarily to:

A company reacquires its own shares during the fiscal year and reports the transaction in the theoretically correct manner.What effect will this transaction have on shareholders' equity and earnings per share, respectively?

The conversion from one type of share to another should be accounted for at:

Gains on sale of treasury stock should be credited to:

Dividends are paid when declared.

Both preferred and common shares may be cumulative.

Preferred shareholders normally have the same voting rights as common shareholders.

A property dividend causes a debit to retained earnings equal to the of the property distributed.

PQR Inc.had 1,000 common shares outstanding with a par value of $10 per share.There was $20,000 of contributed surplus arising from previous retirements of shares in this class.Assume that half of these shares were retired for $14 per share.The journal entry to record this transaction would include:

The order in which dividends are allocated to common and preferred shares depends upon the provisions in the respective stock contracts.Choose the correct statement regarding this allocation.

Authorized share capital refers to the total number of shares:

When a company issues to its shareholders some shares of another corporation's stock that currently are held as an investment, the company is issuing a stock dividend.

How should a gain from the sale of treasury stock be reflected when using the single transaction method of recording treasury stock transactions?

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

Total retained earnings include both appropriated and unappropriated retained earnings.

Major factors contributing to the growth of the corporate form of business includes all of the following except:

Stock splits are often issued primarily to:

A company reacquires its own shares during the fiscal year and reports the transaction in the theoretically correct manner.What effect will this transaction have on shareholders' equity and earnings per share, respectively?

The conversion from one type of share to another should be accounted for at:

Gains on sale of treasury stock should be credited to:

Dividends are paid when declared.

Both preferred and common shares may be cumulative.

Preferred shareholders normally have the same voting rights as common shareholders.

A property dividend causes a debit to retained earnings equal to the of the property distributed.

The order in which dividends are allocated to common and preferred shares depends upon the provisions in the respective stock contracts.Choose the correct statement regarding this allocation.

Authorized share capital refers to the total number of shares:

When a company issues to its shareholders some shares of another corporation's stock that currently are held as an investment, the company is issuing a stock dividend.

How should a gain from the sale of treasury stock be reflected when using the single transaction method of recording treasury stock transactions?

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