Question 1

The forfeited shares account is used to make up any shortfall:

Accepted Answer

A)  to the forfeiting shareholder. 
B)  the forfeited share reserve. 
C)  on the issue of the shares. 
D)  on the cash at bank account . 
A)  to the forfeiting shareholder. 
B)  the forfeited share reserve. 
C)  on the issue of the shares. 
D)  on the cash at bank account .

Question 2

When shares were issued at amounts greater than par value this was called a share premium.

Accepted Answer

A) True 
 B)False

Question 3

A statement of changes in equity includes:

Accepted Answer

A)  each item of income and expense for the period that, as required by other Australian Accounting Standards, is recognised directly in equity. 
B)  profit or loss for the period. 
C)  total income and expense for the period showing separately the total amounts attributable to equity holders of the parent and to minority interest. 
D)  each item of income and expense for the period that, as required by other Australian Accounting Standards, is recognised directly in equity, profit or loss for the period, and total income and expense for the period showing separately the total amounts attributable to equity holders of the parent and to minority interest. 
A)  each item of income and expense for the period that, as required by other Australian Accounting Standards, is recognised directly in equity. 
B)  profit or loss for the period. 
C)  total income and expense for the period showing separately the total amounts attributable to equity holders of the parent and to minority interest. 
D)  each item of income and expense for the period that, as required by other Australian Accounting Standards, is recognised directly in equity, profit or loss for the period, and total income and expense for the period showing separately the total amounts attributable to equity holders of the parent and to minority interest.

Question 4

If a partly paid share issue is oversubscribed and the shares are allocated on a pro rata basis,the excess application monies must be refunded to all subscribers.

Accepted Answer

A) True 
 B)False

Question 5

What is meant by an oversubscription of a share offer?
 Explain the two approaches that could be adopted in the case of an oversubscription.

Accepted Answer

An oversubscription of a share offer occ

Question 6

As a residual interest,equity ranks after liabilities in terms of a claim against the assets of a reporting entity.

Accepted Answer

A) True 
 B)False

Question 7

In a public issue of shares,the procedure to be adopted in the case of an oversubscription is normally specified in the prospectus.

Accepted Answer

A) True 
 B)False

Question 8

Goggle Ltd has 1 million shares issued.The directors have elected to make a '1 for 5' bonus issue.The current market price of the shares is $10 each.What is the summary entry to record the bonus issue?

Accepted Answer

A) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Cash at bank } & 10000000 & \
\hline \mathrm { Cr } & \text { Share capital-ordinary shares } & & 10000000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Retained profits } & 2000000 & \
\hline \mathrm { Cr } & \text { Share capital-ordinary shares } & & 2000000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Share capital-ordinary shares } & 2000000 & \
\hline \mathrm { Cr } & \text { Cash at bank } & & 2000000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Forfeit shares reserve } & 1000000 & \
\hline \mathrm { Cr } & \text { Share capital-ordinary shares } & & 1000000 \
\hline
\end{array}$$ 
A) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Cash at bank } & 10000000 & \
\hline \mathrm { Cr } & \text { Share capital-ordinary shares } & & 10000000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Retained profits } & 2000000 & \
\hline \mathrm { Cr } & \text { Share capital-ordinary shares } & & 2000000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Share capital-ordinary shares } & 2000000 & \
\hline \mathrm { Cr } & \text { Cash at bank } & & 2000000 \
\hline
\end{array}$$ 
D) 
$$\begin{array} { | l | l | l | l | } 
\hline \mathrm { Dr } & \text { Forfeit shares reserve } & 1000000 & \
\hline \mathrm { Cr } & \text { Share capital-ordinary shares } & & 1000000 \
\hline
\end{array}$$

Question 9

Equity's claim against the assets of the entity:

Accepted Answer

A)  takes priority as owners. 
B)  is ranked before employee entitlements. 
C)  is equal to the value of cash reserves held in equity. 
D)  ranks after liabilities in terms of priority. 
A)  takes priority as owners. 
B)  is ranked before employee entitlements. 
C)  is equal to the value of cash reserves held in equity. 
D)  ranks after liabilities in terms of priority.

Question 10

Semaphore Ltd called for subscriptions for 15 million shares.The issue price per share is $2.50 to be paid in two parts: the first payment of $1.00 is to be made on application and the remaining $1.50 is to be paid within 1 month of allotment.At the end of September,when applications close,applications for 19 million shares have been received.The shares are allotted on 1 October on a pro rata basis with the excess application money to be applied against the amount due on allotment.All amounts on allotment are paid by the due date.What are the accounting entries to record these events?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 11

It used to be normal practice to issue shares at below par value.

Accepted Answer

A) True 
 B)False

Question 12

The owners' equity of an organisation is the same as the shareholders' funds of a company.

Accepted Answer

A) True 
 B)False

Question 13

What is the effect of a share split on earnings per share and the number of shares outstanding,respectively?

Accepted Answer

A)  increase; decrease 
B)  decrease; increase 
C)  increase; increase 
D)  no effect; increase 
A)  increase; decrease 
B)  decrease; increase 
C)  increase; increase 
D)  no effect; increase

Question 14

A company may elect to issues its shares at any price,which will depend on:

Accepted Answer

A)  the last sales price for the company's shares before the new issue. 
B)  the market demand. 
C)  the minimum price that has been paid for the shares over the last reporting period. . 
D)  the amount specified in legislation at which all Australian companies were required to issue shares. 
A)  the last sales price for the company's shares before the new issue. 
B)  the market demand. 
C)  the minimum price that has been paid for the shares over the last reporting period. . 
D)  the amount specified in legislation at which all Australian companies were required to issue shares.

Question 15

An effect of a bonus issue to all shareholders is to:

Accepted Answer

A)  increase the total amount of shareholders' funds. 
B)  make the amount that was previously recorded as retained earnings no longer available for the payment of cash dividends. 
C)  alter the current shareholders' proportionate share of the company's net assets. 
D)  increase the total assets of the company. 
A)  increase the total amount of shareholders' funds. 
B)  make the amount that was previously recorded as retained earnings no longer available for the payment of cash dividends. 
C)  alter the current shareholders' proportionate share of the company's net assets. 
D)  increase the total assets of the company.

Question 16

For each class of share capital,an entity shall disclose either on the face of the statement of financial position or in the notes:

Accepted Answer

A)  shares in the entity held by the entity or its subsidiaries or associates. 
B)  the number of shares authorised. 
C)  the number of shares issued but not fully paid. 
D)  all of the given answers. 
A)  shares in the entity held by the entity or its subsidiaries or associates. 
B)  the number of shares authorised. 
C)  the number of shares issued but not fully paid. 
D)  all of the given answers.

Question 17

An individual's views on measurement techniques for assets and liabilities will have a direct impact on the amount recorded in shareholders' funds.

Accepted Answer

A) True 
 B)False

Question 18

Share capital:

Accepted Answer

A)  relates to one class of shares, with the remaining equity recorded as reserves or retained profits. 
B)  represents the amount shareholders are guaranteed to receive if the company is wound up. 
C)  may relate to one or several classes of shares. 
D)  may be calculated by subtracting liabilities from assets. 
A)  relates to one class of shares, with the remaining equity recorded as reserves or retained profits. 
B)  represents the amount shareholders are guaranteed to receive if the company is wound up. 
C)  may relate to one or several classes of shares. 
D)  may be calculated by subtracting liabilities from assets.

Question 19

A share split is usually funded through retained earnings.

Accepted Answer

A) True 
 B)False

Question 20

AASB 101 Presentation of Financial Statements requires an entity to disclose a description of the nature and purpose of each reserve within equity.

Accepted Answer

A) True 
 B)False

Exam 13: Share Capital and Reserves

The forfeited shares account is used to make up any shortfall:

When shares were issued at amounts greater than par value this was called a share premium.

A statement of changes in equity includes:

If a partly paid share issue is oversubscribed and the shares are allocated on a pro rata basis,the excess application monies must be refunded to all subscribers.

What is meant by an oversubscription of a share offer? Explain the two approaches that could be adopted in the case of an oversubscription.

As a residual interest,equity ranks after liabilities in terms of a claim against the assets of a reporting entity.

In a public issue of shares,the procedure to be adopted in the case of an oversubscription is normally specified in the prospectus.

Goggle Ltd has 1 million shares issued.The directors have elected to make a '1 for 5' bonus issue.The current market price of the shares is $10 each.What is the summary entry to record the bonus issue?

Equity's claim against the assets of the entity:

It used to be normal practice to issue shares at below par value.

The owners' equity of an organisation is the same as the shareholders' funds of a company.

What is the effect of a share split on earnings per share and the number of shares outstanding,respectively?

A company may elect to issues its shares at any price,which will depend on:

An effect of a bonus issue to all shareholders is to:

For each class of share capital,an entity shall disclose either on the face of the statement of financial position or in the notes:

An individual's views on measurement techniques for assets and liabilities will have a direct impact on the amount recorded in shareholders' funds.

Share capital:

A share split is usually funded through retained earnings.

AASB 101 Presentation of Financial Statements requires an entity to disclose a description of the nature and purpose of each reserve within equity.

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Accounting

An Overview of Accounting for Assets

Depreciation of Property, plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

Accounting for Heritage Assets and Biological Assets

An Overview of Accounting for Liabilities

Accounting for Leases

Accounting for Employee Benefits

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Share-Based Payments

Accounting for Income Taxes

The Statement of Cash Flows

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Events Occurring After the End of the Reporting Period

Segment Reporting

Related Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues IV: Accounting for Changes in the Degree of Ownership of a Subsidiary

Accounting for Equity Investments,including Investments in Associates and Joint Arrangements

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

Filters