Question 1

The conversion of preferred shares into common shares results in no change in total shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 2

Dividends in arrears on cumulative preferred shares constitute a liability to the corporation that should be recorded (accrued).

Accepted Answer

A) True 
 B)False

Question 3

IFRS requires that any public company repurchasing its own shares with the intent of reissuing these to the public treat these shares as treasury shares.

Accepted Answer

A) True 
 B)False

Question 4

Lorella entered into a common share subscription contract for 1,000 shares at a subscription price of $20.She paid 20% of the total price as a down payment and also paid the next two 20% instalments (she paid 60% in all).Lorella then defaulted on the contract and refused to pay any more.Assuming the company must issue shares in proportion to the cash paid, the entry to record the default would include:

Accepted Answer

A) dr.common shares subscribed $20,000 
B) dr.common shares subscribed $12,000 
C) dr.subscriptions receivable $8,000 
D) dr.common shares $12,000 
A) dr.common shares subscribed $20,000 
B) dr.common shares subscribed $12,000 
C) dr.subscriptions receivable $8,000 
D) dr.common shares $12,000

Question 5

The date of record for a cash dividend follows the date of payment and precedes the date of declaration.

Accepted Answer

A) True 
 B)False

Question 6

When a company buys back and retires its own shares, those shares are said to be issued but not outstanding.

Accepted Answer

A) True 
 B)False

Question 7

Treasury shares cannot be voted, nor paid dividends, pending resale.

Accepted Answer

A) True 
 B)False

Question 8

Total equities of a corporation usually include:

Accepted Answer

A) Total owners' equity less treasury stock at cost. 
B) Contributed capital plus retained earnings. 
C) Contributed capital plus retained earnings, and plus creditors' interest. 
D) Assets plus contributed capital, and plus retained earnings. 
A) Total owners' equity less treasury stock at cost. 
B) Contributed capital plus retained earnings. 
C) Contributed capital plus retained earnings, and plus creditors' interest. 
D) Assets plus contributed capital, and plus retained earnings.

Question 9

If preferred shares are non-participating, then:

Accepted Answer

A) Preferred shareholders are not entitled to a prior year's dividend once that year has passed. 
B) Preferred shareholders are not entitled to vote. 
C) Preferred shareholders may receive dividends in excess of a specific rate if common stockholders receive more than that specific rate. 
D) Preferred dividends for the year are limited to a specific rate. 
A) Preferred shareholders are not entitled to a prior year's dividend once that year has passed. 
B) Preferred shareholders are not entitled to vote. 
C) Preferred shareholders may receive dividends in excess of a specific rate if common stockholders receive more than that specific rate. 
D) Preferred dividends for the year are limited to a specific rate.

Question 10

On July 1, 2019, the Board of Directors of BXC declared a stock dividend that required the issuance of 5,000 common shares.The common shares had a market value at this date of $18 per share.Retained earnings amounted to $900,000.Give the entry to record the stock dividend (the shares wer issued), assuming:
The 5,000 shares represented 10% of the previously outstanding shares.

Accepted Answer

Please see

Question 11

During December 2019, BRC declared and issued a 1 for 5 stock dividend on its 100,000 outstanding common shares.The per share amounts were: original average issue price $16; current market price (end 2019)$13; and the average market price for 1999, $15.Give the required journal entry to record the simultaneous declaration and issuance of the stock dividend.

Accepted Answer

Small stoc

Question 12

A large stock split should be accounted for by capitalizing the current market value of the stock.

Accepted Answer

A) True 
 B)False

Question 13

A firm declares a property dividend to its shareholders.The assets to be distributed in the dividend have a combined book value of $40,000 and combined market value of $60,000.Before taxes, the net change in retained earnings as a result of this nonreciprocal transfer is:

Accepted Answer

A) $0 
B) $60,000 
C) $20,000 
D) $40,000 
A) $0 
B) $60,000 
C) $20,000 
D) $40,000

Question 14

Convertible preferred shares are convertible (usually to common shares)at the option of the shareholder and not at the option of the corporation.

Accepted Answer

A) True 
 B)False

Question 15

If a corporation only has one class of shares, that class of shares will be referred to as Share Capital on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 16

Losses that a corporation suffers from dealing in its own stock may:

Accepted Answer

A) Never be recorded in the retained earnings account. 
B) Be recorded as a long-term loss. 
C) Be recorded in the retained earnings account. 
D) Be recorded as a loss from peripheral or incidental transactions (i.e., not from continuing operations). 
A) Never be recorded in the retained earnings account. 
B) Be recorded as a long-term loss. 
C) Be recorded in the retained earnings account. 
D) Be recorded as a loss from peripheral or incidental transactions (i.e., not from continuing operations).

Question 17

Preferred shares, which have the most restrictive features, are:

Accepted Answer

A) Noncumulative, non-participating, nonvoting. 
B) Non-participating, cumulative, nonvoting. 
C) Fully participating, nonvoting. 
D) Noncumulative, fully participating, nonvoting. 
A) Noncumulative, non-participating, nonvoting. 
B) Non-participating, cumulative, nonvoting. 
C) Fully participating, nonvoting. 
D) Noncumulative, fully participating, nonvoting.

Question 18

Zygo sold 1,000 common shares (par $3)at $5 per share on a subscription basis.The entry to record this transaction included a credit to:

Accepted Answer

A) Cash. 
B) Subscriptions receivable. 
C) Contributed capital in excess of par. 
D) Accounts receivable. 
A) Cash. 
B) Subscriptions receivable. 
C) Contributed capital in excess of par. 
D) Accounts receivable.

Question 19

Only certain unrealized gains flow through Other Comprehensive Income - any realized gains flow through retained earnings.

Accepted Answer

A) True 
 B)False

Question 20

ABC Inc.issued 1,000 common shares and 3,000 preferred shares for a lump sum of $25,000.The fair market value of each share on the date of issue was $6 per common share and $8 per preferred share.How much of the proceeds received should be allocated to the preferred shares on the date of issue?

Accepted Answer

A) $19,750 
B) $6,250 
C) $5,000 
D) $20,000 
A) $19,750 
B) $6,250 
C) $5,000 
D) $20,000

The conversion of preferred shares into common shares results in no change in total shareholders' equity.

Dividends in arrears on cumulative preferred shares constitute a liability to the corporation that should be recorded (accrued).

IFRS requires that any public company repurchasing its own shares with the intent of reissuing these to the public treat these shares as treasury shares.

The date of record for a cash dividend follows the date of payment and precedes the date of declaration.

When a company buys back and retires its own shares, those shares are said to be issued but not outstanding.

Treasury shares cannot be voted, nor paid dividends, pending resale.

Total equities of a corporation usually include:

If preferred shares are non-participating, then:

A large stock split should be accounted for by capitalizing the current market value of the stock.

A firm declares a property dividend to its shareholders.The assets to be distributed in the dividend have a combined book value of $40,000 and combined market value of $60,000.Before taxes, the net change in retained earnings as a result of this nonreciprocal transfer is:

Convertible preferred shares are convertible (usually to common shares)at the option of the shareholder and not at the option of the corporation.

If a corporation only has one class of shares, that class of shares will be referred to as Share Capital on the statement of financial position.

Losses that a corporation suffers from dealing in its own stock may:

Preferred shares, which have the most restrictive features, are:

Zygo sold 1,000 common shares (par $3)at $5 per share on a subscription basis.The entry to record this transaction included a credit to:

Only certain unrealized gains flow through Other Comprehensive Income - any realized gains flow through retained earnings.

ABC Inc.issued 1,000 common shares and 3,000 preferred shares for a lump sum of $25,000.The fair market value of each share on the date of issue was $6 per common share and $8 per preferred share.How much of the proceeds received should be allocated to the preferred shares on the date of issue?

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 conversion of preferred shares into common shares results in no change in total shareholders' equity.

Dividends in arrears on cumulative preferred shares constitute a liability to the corporation that should be recorded (accrued).

IFRS requires that any public company repurchasing its own shares with the intent of reissuing these to the public treat these shares as treasury shares.

The date of record for a cash dividend follows the date of payment and precedes the date of declaration.

When a company buys back and retires its own shares, those shares are said to be issued but not outstanding.

Treasury shares cannot be voted, nor paid dividends, pending resale.

Total equities of a corporation usually include:

If preferred shares are non-participating, then:

A large stock split should be accounted for by capitalizing the current market value of the stock.

A firm declares a property dividend to its shareholders.The assets to be distributed in the dividend have a combined book value of $40,000 and combined market value of $60,000.Before taxes, the net change in retained earnings as a result of this nonreciprocal transfer is:

Convertible preferred shares are convertible (usually to common shares)at the option of the shareholder and not at the option of the corporation.

If a corporation only has one class of shares, that class of shares will be referred to as Share Capital on the statement of financial position.

Losses that a corporation suffers from dealing in its own stock may:

Preferred shares, which have the most restrictive features, are:

Zygo sold 1,000 common shares (par $3)at $5 per share on a subscription basis.The entry to record this transaction included a credit to:

Only certain unrealized gains flow through Other Comprehensive Income - any realized gains flow through retained earnings.

ABC Inc.issued 1,000 common shares and 3,000 preferred shares for a lump sum of $25,000.The fair market value of each share on the date of issue was $6 per common share and $8 per preferred share.How much of the proceeds received should be allocated to the preferred shares on the date of issue?

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