Question 1

The restriction or appropriation of retained earnings does not involve the segregation of assets.

Accepted Answer

A) True 
 B)False

Question 2

Private companies in Canada may choose between IFRS or ASPE.

Accepted Answer

A) True 
 B)False

Question 3

The declaration and issuance of a common stock dividend:

Accepted Answer

A) Does not change the internal content of retained earnings. 
B) Decreases total owners' equity and increases the related common stock account. 
C) Decreases assets and decreases total owner's equity. 
D) Does not change assets, liabilities or total owners' equity. 
A) Does not change the internal content of retained earnings. 
B) Decreases total owners' equity and increases the related common stock account. 
C) Decreases assets and decreases total owner's equity. 
D) Does not change assets, liabilities or total owners' equity.

Question 4

On January 1, 2015, the accounts of CXC reflected the following:
The single-transaction method is used.On February 1, 2015, CXC purchased 5,000 of its own shares at $2.10 per share.Later, on December 1, 2015, CXC sold 2,000 of these treasury shares at $1.50 per share.Give the journal entry on December 1, 2015, to record this sale of treasury stock.

Accepted Answer

Please see

Question 5

When all of the preferred shares are purchased and formally retired by the issuing corporation for less than its original issue price, accounting for the retirement increases:

Accepted Answer

A) Contributed capital in excess of par, common stock. 
B) Contributed capital from retirement of preferred shares. 
C) Net income for the period. 
D) Retained earnings. 
A) Contributed capital in excess of par, common stock. 
B) Contributed capital from retirement of preferred shares. 
C) Net income for the period. 
D) Retained earnings.

Question 6

A bad debt loss is recognized when a subscriber to common shares defaults.

Accepted Answer

A) True 
 B)False

Question 7

Common share subscriptions receivable should always be reported as a current asset.

Accepted Answer

A) True 
 B)False

Question 8

The authorization of new share capital is a capital transaction, which requires a journal entry.

Accepted Answer

A) True 
 B)False

Question 9

A stock split results in the reduction of the par or stated value per share and a proportional increase in the number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 10

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 shares 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 $90,000 in dividends at the end of the current year, what portion of that amount is distributed to the preferred shareholders?

Accepted Answer

A) $56,250 
B) $54,000 
C) $60,000 
D) $55,250 
A) $56,250 
B) $54,000 
C) $60,000 
D) $55,250

Question 11

Fractional share rights are usually issued:

Accepted Answer

A) At the time a stock dividend is declared. 
B) At the time a property dividend is declared. 
C) When a corporation issues a stock split. 
D) At the time a cash dividend is declared. 
A) At the time a stock dividend is declared. 
B) At the time a property dividend is declared. 
C) When a corporation issues a stock split. 
D) At the time a cash dividend is declared.

Question 12

Legal capital is related directly to the total number of shares issued.

Accepted Answer

A) True 
 B)False

Question 13

Businesses engage in many transactions that are unaffected by the form of the business: proprietorship, partnership, or corporation.

Accepted Answer

A) True 
 B)False

Question 14

Treasury shares held by management are considered to be issued but not outstanding.

Accepted Answer

A) True 
 B)False

Question 15

Explain why companies may want to reacquire their own shares?

Accepted Answer

(1)To increase earnings per share
(2)To

Question 16

BX had the following shares outstanding: Preferred shares, $6, 2,000 shares = $100,000 Common shares, 2,000 shares = $200,000
(Matching dividend, if applicable, $12)
The preferred shares are cumulative, fully participating; dividends are three years in arrears, excluding the current year; dividends declared in the current year amount to
$87,000.The total amount of dividends to which common shareholders are entitled is:

Accepted Answer

A) $40,000 
B) $52,000 
C) $34,000 
D) $49,000 
A) $40,000 
B) $52,000 
C) $34,000 
D) $49,000

Question 17

When the value of a company's financial liabilities has increased in part due to a change in market rates and in part due to an improvement to the company's credit rating, the entire change in the fair value of the instrument is debited to AOCI.

Accepted Answer

A) True 
 B)False

Question 18

A scrip dividend is effectively a promise made to a shareholder by the company to distribute some form of dividend in the future.

Accepted Answer

A) True 
 B)False

Question 19

When a company is publicly traded, that means every class of share capital must be publicly traded.

Accepted Answer

A) True 
 B)False

Question 20

A stock dividend:

Accepted Answer

A) Increases the wealth of the recipient if the market value of the shares are unchanged by the stock dividend 
B) If 100%, has no effect on the market value of the shares 
C) If less than 20% to 25%, reduces retained earnings by the par value of shares distributed in the dividend 
D) Alters the par value of the common shares 
A) Increases the wealth of the recipient if the market value of the shares are unchanged by the stock dividend 
B) If 100%, has no effect on the market value of the shares 
C) If less than 20% to 25%, reduces retained earnings by the par value of shares distributed in the dividend 
D) Alters the par value of the common shares

The restriction or appropriation of retained earnings does not involve the segregation of assets.

Private companies in Canada may choose between IFRS or ASPE.

The declaration and issuance of a common stock dividend:

When all of the preferred shares are purchased and formally retired by the issuing corporation for less than its original issue price, accounting for the retirement increases:

A bad debt loss is recognized when a subscriber to common shares defaults.

Common share subscriptions receivable should always be reported as a current asset.

The authorization of new share capital is a capital transaction, which requires a journal entry.

A stock split results in the reduction of the par or stated value per share and a proportional increase in the number of shares outstanding.

Fractional share rights are usually issued:

Legal capital is related directly to the total number of shares issued.

Businesses engage in many transactions that are unaffected by the form of the business: proprietorship, partnership, or corporation.

Treasury shares held by management are considered to be issued but not outstanding.

Explain why companies may want to reacquire their own shares?

When the value of a company's financial liabilities has increased in part due to a change in market rates and in part due to an improvement to the company's credit rating, the entire change in the fair value of the instrument is debited to AOCI.

A scrip dividend is effectively a promise made to a shareholder by the company to distribute some form of dividend in the future.

When a company is publicly traded, that means every class of share capital must be publicly traded.

A stock dividend:

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 restriction or appropriation of retained earnings does not involve the segregation of assets.

Private companies in Canada may choose between IFRS or ASPE.

The declaration and issuance of a common stock dividend:

When all of the preferred shares are purchased and formally retired by the issuing corporation for less than its original issue price, accounting for the retirement increases:

A bad debt loss is recognized when a subscriber to common shares defaults.

Common share subscriptions receivable should always be reported as a current asset.

The authorization of new share capital is a capital transaction, which requires a journal entry.

A stock split results in the reduction of the par or stated value per share and a proportional increase in the number of shares outstanding.

Fractional share rights are usually issued:

Legal capital is related directly to the total number of shares issued.

Businesses engage in many transactions that are unaffected by the form of the business: proprietorship, partnership, or corporation.

Treasury shares held by management are considered to be issued but not outstanding.

Explain why companies may want to reacquire their own shares?

When the value of a company's financial liabilities has increased in part due to a change in market rates and in part due to an improvement to the company's credit rating, the entire change in the fair value of the instrument is debited to AOCI.

A scrip dividend is effectively a promise made to a shareholder by the company to distribute some form of dividend in the future.

When a company is publicly traded, that means every class of share capital must be publicly traded.

A stock dividend:

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