Question 1

Explain how to compute book value per share and discuss how it can be used to analyze the financial condition of a corporation.

Accepted Answer

Book value per share is calculated by di

Question 2

A preference share on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

Accepted Answer

A)  Participating preference share. 
B)  Callable preference share. 
C)  Cumulative preference share. 
D)  Convertible preference share. 
E)  Noncumulative preference share. 
A)  Participating preference share. 
B)  Callable preference share. 
C)  Cumulative preference share. 
D)  Convertible preference share. 
E)  Noncumulative preference share.

Question 3

What are treasury shares? How is the purchase and sale of treasury shares recorded?

Accepted Answer

Treasury shares are the company's own is

Question 4

A corporation sometimes gives its shares to promoters in exchange for their services in organizing the corporation.

Accepted Answer

A) True 
 B)False

Question 5

A company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 treasury shares. The journal entry to record the dividend declaration is:

Accepted Answer

A)  Debit Retained Earnings $104,500; credit Ordinary Dividend Payable $104,500. 
B)  Debit Ordinary Dividend Payable $104,500; credit Cash $104,500. 
C)  Debit Retained Earnings $100,100; credit Ordinary Dividend Payable $100,100. 
D)  Debit Ordinary Dividend Payable $100,100; credit Cash $100,100. 
E)  Debit Retained Earnings $110,000; credit Ordinary Dividend Payable $110,000. 
A)  Debit Retained Earnings $104,500; credit Ordinary Dividend Payable $104,500. 
B)  Debit Ordinary Dividend Payable $104,500; credit Cash $104,500. 
C)  Debit Retained Earnings $100,100; credit Ordinary Dividend Payable $100,100. 
D)  Debit Ordinary Dividend Payable $100,100; credit Cash $100,100. 
E)  Debit Retained Earnings $110,000; credit Ordinary Dividend Payable $110,000.

Question 6

The right of ordinary shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of ordinary shares issued by the corporation is called a:

Accepted Answer

A)  Preemptive right. 
B)  Proxy right. 
C)  Right to call. 
D)  Financial leverage. 
E)  Voting right. 
A)  Preemptive right. 
B)  Proxy right. 
C)  Right to call. 
D)  Financial leverage. 
E)  Voting right.

Question 7

A bonus issue or share dividend reduces a corporation's assets and its shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 8

Explain the preparation of journal entries to record the issuance of par value, stated value, and no-par value ordinary shares.

Accepted Answer

When a share is issued for cash, cash is

Question 9

A company issued 60 $100 par value ordinary shares for $7,000 cash. The total amount of paid-in capital is:

Accepted Answer

A)  $100. 
B)  $600. 
C)  $1,000. 
D)  $6,000. 
E)  $7,000. 
A)  $100. 
B)  $600. 
C)  $1,000. 
D)  $6,000. 
E)  $7,000.

Question 10

A liability for dividends exists:

Accepted Answer

A)  When cumulative preference shares are sold. 
B)  On the date of declaration. 
C)  On the date of record. 
D)  On the date of payment. 
E)  For dividends in arrears on cumulative preference shares. 
A)  When cumulative preference shares are sold. 
B)  On the date of declaration. 
C)  On the date of record. 
D)  On the date of payment. 
E)  For dividends in arrears on cumulative preference shares.

Question 11

Book value per ordinary share is computed by:

Accepted Answer

A)  Multiplying the number of ordinary shares outstanding times the market price per common share. 
B)  Dividing total assets by the number of shares outstanding. 
C)  Dividing shareholders' equity applicable to ordinary shares by the number of ordinary shares outstanding. 
D)  Multiplying the number of ordinary shares outstanding by par value per share. 
E)  Dividing the number of ordinary shares outstanding by shareholders' equity applicable to ordinary shares. 
A)  Multiplying the number of ordinary shares outstanding times the market price per common share. 
B)  Dividing total assets by the number of shares outstanding. 
C)  Dividing shareholders' equity applicable to ordinary shares by the number of ordinary shares outstanding. 
D)  Multiplying the number of ordinary shares outstanding by par value per share. 
E)  Dividing the number of ordinary shares outstanding by shareholders' equity applicable to ordinary shares.

Question 12

Book value per share:

Accepted Answer

A)  Reflects the value per share if a company is liquidated at balance sheet amounts. 
B)  Is assets divided by equity. 
C)  Is assets divided by the number of ordinary shares outstanding. 
D)  Measures the worth of assets. 
E)  Is equal to par value per share. 
A)  Reflects the value per share if a company is liquidated at balance sheet amounts. 
B)  Is assets divided by equity. 
C)  Is assets divided by the number of ordinary shares outstanding. 
D)  Measures the worth of assets. 
E)  Is equal to par value per share.

Question 13

A bonus issue or share dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

Accepted Answer

A) True 
 B)False

Question 14

is a class of share assigned a value by the corporation.

Accepted Answer

The answer of is a class of share assigned a...

Question 15

Quark Company earned $90,000 in income and paid cash dividends of $10,000 to preference shareholders during the current year. Quark had 12,500 weighted-average ordinary shares outstanding for the year. Calculate the company's earnings per share.

Accepted Answer

($90,000 -

Question 16

are corrections of material errors in prior period financial statements.

Accepted Answer

Prior peri

Question 17

A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $120, and its book value per share is $96. Its price-earnings ratio equals:

Accepted Answer

A)  9.6. 
B)  19.2. 
C)  12.5. 
D)  10.0. 
E)  8.5. 
A)  9.6. 
B)  19.2. 
C)  12.5. 
D)  10.0. 
E)  8.5.

Question 18

Corporations are subject to substantially fewer regulations and laws than are proprietorships and partnerships.

Accepted Answer

A) True 
 B)False

Question 19

A company has $424,000 in total shareholders' equity. The company has no preference shares and has 40,000 ordinary shares outstanding. Its book value per share is $10.60.

Accepted Answer

A) True 
 B)False

Question 20

A company is authorized to issue 750,000 $5 par value ordinary shares. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

Accepted Answer

The answer of A company is authorized to issue 750,000...

Exam 13: Accounting for Corporations

Explain how to compute book value per share and discuss how it can be used to analyze the financial condition of a corporation.

A preference share on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

What are treasury shares? How is the purchase and sale of treasury shares recorded?

A corporation sometimes gives its shares to promoters in exchange for their services in organizing the corporation.

A company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 treasury shares. The journal entry to record the dividend declaration is:

The right of ordinary shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of ordinary shares issued by the corporation is called a:

A bonus issue or share dividend reduces a corporation's assets and its shareholders' equity.

Explain the preparation of journal entries to record the issuance of par value, stated value, and no-par value ordinary shares.

A company issued 60 $100 par value ordinary shares for $7,000 cash. The total amount of paid-in capital is:

A liability for dividends exists:

Book value per ordinary share is computed by:

Book value per share:

A bonus issue or share dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

is a class of share assigned a value by the corporation.

Quark Company earned $90,000 in income and paid cash dividends of $10,000 to preference shareholders during the current year. Quark had 12,500 weighted-average ordinary shares outstanding for the year. Calculate the company's earnings per share.

are corrections of material errors in prior period financial statements.

A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $120, and its book value per share is $96. Its price-earnings ratio equals:

Corporations are subject to substantially fewer regulations and laws than are proprietorships and partnerships.

A company has $424,000 in total shareholders' equity. The company has no preference shares and has 40,000 ordinary shares outstanding. Its book value per share is $10.60.

A company is authorized to issue 750,000 $5 par value ordinary shares. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

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

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