Question 1

Preference shares means that:

Accepted Answer

A)  Preference shareholders are allocated their dividends before dividends are allocated to ordinary shareholders. 
B)  Preference shareholders are guaranteed dividends. 
C)  Dividends are paid quarterly. 
D)  Preference shareholders prefer dividends more than ordinary shareholders. 
E)  Dividends must be declared on preference shares every year. 
A)  Preference shareholders are allocated their dividends before dividends are allocated to ordinary shareholders. 
B)  Preference shareholders are guaranteed dividends. 
C)  Dividends are paid quarterly. 
D)  Preference shareholders prefer dividends more than ordinary shareholders. 
E)  Dividends must be declared on preference shares every year.

Question 2

Achieving an increased return on ordinary shares by paying dividends on preference shares at a rate that is less than the rate of return earned with the assets invested from the preference shares issuance is called:

Accepted Answer

A)  Financial leverage. 
B)  Share discount. 
C)  Share premium. 
D)  Preemptive right. 
E)  Capital gain. 
A)  Financial leverage. 
B)  Share discount. 
C)  Share premium. 
D)  Preemptive right. 
E)  Capital gain.

Question 3

A company issued 7% preference shares with a $100 par value. This means that:

Accepted Answer

A)  Preference shareholders have a guaranteed dividend. 
B)  The amount of the potential dividend is $7 per year per preference share. 
C)  Preference shareholders are entitled to 7% of the annual income. 
D)  The market price per share will approximate $100 per share. 
E)  Only 7% of the total paid-in capital can be preference shares. 
A)  Preference shareholders have a guaranteed dividend. 
B)  The amount of the potential dividend is $7 per year per preference share. 
C)  Preference shareholders are entitled to 7% of the annual income. 
D)  The market price per share will approximate $100 per share. 
E)  Only 7% of the total paid-in capital can be preference shares.

Question 4

A company has $595,000 in total shareholders' equity. Preference shares outstanding are valued at $150,000, and 75,000 ordinary shares are outstanding. Its book value per ordinary share is $7.93.

Accepted Answer

A) True 
 B)False

Question 5

A corporation can issue two kinds of shares - ordinary and preference.

Accepted Answer

A) True 
 B)False

Question 6

A proxy is a document that gives a designated agent the right to vote on behalf of a shareholder.

Accepted Answer

A) True 
 B)False

Question 7

Match each of the following terms with the appropriate definitions.

Accepted Answer

The answer of Match each of the following terms with...

Question 8

A company's shares are selling for $67.20 per share and its earnings per share is $3.50 for the current year. Calculate the price-earnings ratio.

Accepted Answer

$67.20 / $

Question 9

The statement of changes in equity:

Accepted Answer

A)  Is part of the statement of comprehensive income. 
B)  Shows only the ending balances in shareholders' equity. 
C)  Describes changes in paid-in capital and retained earnings subcategories. 
D)  Does not include changes in treasury shares. 
E)  Is not reported under IFRS. 
A)  Is part of the statement of comprehensive income. 
B)  Shows only the ending balances in shareholders' equity. 
C)  Describes changes in paid-in capital and retained earnings subcategories. 
D)  Does not include changes in treasury shares. 
E)  Is not reported under IFRS.

Question 10

What is a corporation? Identify the key advantages and disadvantages of corporations.

Accepted Answer

A corporation is a legal entity separate

Question 11

A company has 40,000 ordinary shares outstanding. The shareholders' equity applicable to ordinary shares is $470,000, and the par value per ordinary share is $10. The book value per share is:

Accepted Answer

A)  $0.09. 
B)  $1.75. 
C)  $10.00. 
D)  $11.75. 
E)  $47.50. 
A)  $0.09. 
B)  $1.75. 
C)  $10.00. 
D)  $11.75. 
E)  $47.50.

Question 12

A company paid a cash dividend of $0.44 per share during the current year, and reported 18,000 ordinary shares issued, and 2,000 ordinary shares as treasury shares during the current year. The year-end market price per share was $27.50. Calculate the following: (1) total amount of cash dividends paid to ordinary shareholders, and (2) dividend yield.

Accepted Answer

(1.) $0.44 x (18,000

Question 13

Share that is not assigned a value per share by the corporation is called .

Accepted Answer

The answer of Share that is not assigned a value...

Question 14

Match each of the following terms with the appropriate definitions.

Accepted Answer

The answer of Match each of the following terms with...

Question 15

Shamrock Company had net income of $30,000. The weighted-average ordinary shares outstanding were 8,000. The company declared a $2,700 dividend on its noncumulative, nonparticipating preference shares. There were no other share transactions. The company's earnings per share is:

Accepted Answer

A)  $2.87. 
B)  $2.73. 
C)  $3.41. 
D)  $3.16. 
E)  $3.75. 
A)  $2.87. 
B)  $2.73. 
C)  $3.41. 
D)  $3.16. 
E)  $3.75.

Question 16

Sparrow Company had net income of $63,000. The company had 9,000 weighted average ordinary shares outstanding. The basic earnings per share equal $7.00 per share.

Accepted Answer

A) True 
 B)False

Question 17

Special rights often granted to preference shares include a preference for receiving dividends and for the distribution of assets if the corporation is liquidated.

Accepted Answer

A) True 
 B)False

Question 18

A corporation has $1,750,000 in shareholders' equity and 350,000 weighted-average ordinary shares outstanding. Calculate the book value per ordinary share.

Accepted Answer

$1,750,000/350,000 s

Question 19

is a general term that refers to any shares issued to obtain owner financing in a corporation.

Accepted Answer

The answer of is a general term that refers to...

Question 20

A corporation declared and issued a 15% bonus issue or share dividend on November 1. The following information was available immediately prior to the dividend: The amount that contributed capital will increase (decrease) as a result of recording this bonus issue or share dividend is:

Accepted Answer

A)  $45,000. 
B)  $135,000. 
C)  $(45,000). 
D)  $(135,000). 
E)  $0. 
A)  $45,000. 
B)  $135,000. 
C)  $(45,000). 
D)  $(135,000). 
E)  $0.

Exam 13: Accounting for Corporations

Preference shares means that:

Achieving an increased return on ordinary shares by paying dividends on preference shares at a rate that is less than the rate of return earned with the assets invested from the preference shares issuance is called:

A company issued 7% preference shares with a $100 par value. This means that:

A company has $595,000 in total shareholders' equity. Preference shares outstanding are valued at $150,000, and 75,000 ordinary shares are outstanding. Its book value per ordinary share is $7.93.

A corporation can issue two kinds of shares - ordinary and preference.

A proxy is a document that gives a designated agent the right to vote on behalf of a shareholder.

Match each of the following terms with the appropriate definitions.

A company's shares are selling for $67.20 per share and its earnings per share is $3.50 for the current year. Calculate the price-earnings ratio.

The statement of changes in equity:

What is a corporation? Identify the key advantages and disadvantages of corporations.

A company has 40,000 ordinary shares outstanding. The shareholders' equity applicable to ordinary shares is $470,000, and the par value per ordinary share is $10. The book value per share is:

Share that is not assigned a value per share by the corporation is called .

Match each of the following terms with the appropriate definitions.

Shamrock Company had net income of $30,000. The weighted-average ordinary shares outstanding were 8,000. The company declared a $2,700 dividend on its noncumulative, nonparticipating preference shares. There were no other share transactions. The company's earnings per share is:

Sparrow Company had net income of $63,000. The company had 9,000 weighted average ordinary shares outstanding. The basic earnings per share equal $7.00 per share.

Special rights often granted to preference shares include a preference for receiving dividends and for the distribution of assets if the corporation is liquidated.

A corporation has $1,750,000 in shareholders' equity and 350,000 weighted-average ordinary shares outstanding. Calculate the book value per ordinary share.

is a general term that refers to any shares issued to obtain owner financing in a corporation.

A corporation declared and issued a 15% bonus issue or share dividend on November 1. The following information was available immediately prior to the dividend: The amount that contributed capital will increase (decrease) as a result of recording this bonus issue or share dividend is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters