Question 1

A company paid $2.10 in dividends. Its earnings per share is $5.40, and its share price is $120 per share. The dividend yield equals 38.9%.

Accepted Answer

A) True 
 B)False

Question 2

If a company resells treasury shares below the acquisition cost, a loss from the sale of treasury shares is recorded.

Accepted Answer

A) True 
 B)False

Question 3

The journal entry to record the declaration of dividends on ordinary shares includes a debit to Retained Earnings and a credit to Ordinary Dividend Payable.

Accepted Answer

A) True 
 B)False

Question 4

The protects shareholders' proportional interest in a corporation by allowing them to purchase their proportional share of any ordinary shares later issued by the corporation.

Accepted Answer

The answer of The protects shareholders' proportional interest in a...

Question 5

Shareholders' equity consists of:

Accepted Answer

A)  Long-term assets. 
B)  Paid-in capital and retained earnings. 
C)  Paid-in capital and par value. 
D)  Retained earnings and cash. 
E)  Premiums and discounts. 
A)  Long-term assets. 
B)  Paid-in capital and retained earnings. 
C)  Paid-in capital and par value. 
D)  Retained earnings and cash. 
E)  Premiums and discounts.

Question 6

A corporation is responsible for its own acts and debts. This is because a corporation is considered a .

Accepted Answer

Separate l

Question 7

A company is authorized to issue 50,000 $50 par value, 8%, cumulative, fully participating preference shares, and 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 50,000...

Question 8

Retained earnings generally consist of a company's cumulative net income less any net losses and dividends declared since its inception.

Accepted Answer

A) True 
 B)False

Question 9

Retained earnings generally consists of a company's cumulative less any and .

Accepted Answer

Net income

Question 10

Prior period adjustments to financial statements can result from:

Accepted Answer

A)  Changes in accounting estimates. 
B)  Unacceptable accounting practices. 
C)  Discontinued operations. 
D)  Changes in tax law. 
E)  Immaterial items. 
A)  Changes in accounting estimates. 
B)  Unacceptable accounting practices. 
C)  Discontinued operations. 
D)  Changes in tax law. 
E)  Immaterial items.

Question 11

The total amount of cash and other assets received by a corporation from its shareholders in exchange for its shares is:

Accepted Answer

A)  Always equal to its par value. 
B)  Always equal to its stated value. 
C)  Referred to as paid-in capital. 
D)  Referred to as retained earnings. 
E)  Always below its stated value. 
A)  Always equal to its par value. 
B)  Always equal to its stated value. 
C)  Referred to as paid-in capital. 
D)  Referred to as retained earnings. 
E)  Always below its stated value.

Question 12

The total amount of cash and other assets the corporation receives from its shareholders in exchange for ordinary shares is called .

Accepted Answer

The answer of The total amount of cash and other...

Question 13

Shares with a price-earnings ratio greater than 20 to 25 are likely to be underpriced.

Accepted Answer

A) True 
 B)False

Question 14

The Perk's earnings per share is $3.11. Its ordinary dividend is $0.36 per share and its share price is $40 per share. Its dividend yield equals 0.9%.

Accepted Answer

A) True 
 B)False

Question 15

The term "authorized shares" is the total number of shares outstanding.

Accepted Answer

A) True 
 B)False

Question 16

Ordinary shareholders always share equally with all other shareholders in all dividends.

Accepted Answer

A) True 
 B)False

Question 17

No-par share to which the directors assign a value per share is called .

Accepted Answer

The answer of No-par share to which the directors assign...

Question 18

What is the effect of dividends on preference shares? Explain how a dividend is distributed in the case of cumulative preference shares with dividends in arrears.

Accepted Answer

Preference shareholders usually have the

Question 19

Preference shares are often issued:

Accepted Answer

A)  To initiate or increase financial leverage. 
B)  To raise capital without sacrificing control. 
C)  To appeal to investors who believe that ordinary shares are too risky. 
D)  To boost the return earned by ordinary shareholders. 
E)  All of these. 
A)  To initiate or increase financial leverage. 
B)  To raise capital without sacrificing control. 
C)  To appeal to investors who believe that ordinary shares are too risky. 
D)  To boost the return earned by ordinary shareholders. 
E)  All of these.

Question 20

Identify and discuss the key differences between ordinary and preference shares.
Both ordinary and preference shares can represent shares of ownership in a corporation.

Accepted Answer

Preference shares have a priority (senio

Exam 13: Accounting for Corporations

A company paid $2.10 in dividends. Its earnings per share is $5.40, and its share price is $120 per share. The dividend yield equals 38.9%.

If a company resells treasury shares below the acquisition cost, a loss from the sale of treasury shares is recorded.

The journal entry to record the declaration of dividends on ordinary shares includes a debit to Retained Earnings and a credit to Ordinary Dividend Payable.

The protects shareholders' proportional interest in a corporation by allowing them to purchase their proportional share of any ordinary shares later issued by the corporation.

Shareholders' equity consists of:

A corporation is responsible for its own acts and debts. This is because a corporation is considered a .

A company is authorized to issue 50,000 $50 par value, 8%, cumulative, fully participating preference shares, and 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:

Retained earnings generally consist of a company's cumulative net income less any net losses and dividends declared since its inception.

Retained earnings generally consists of a company's cumulative less any and .

Prior period adjustments to financial statements can result from:

The total amount of cash and other assets received by a corporation from its shareholders in exchange for its shares is:

The total amount of cash and other assets the corporation receives from its shareholders in exchange for ordinary shares is called .

Shares with a price-earnings ratio greater than 20 to 25 are likely to be underpriced.

The Perk's earnings per share is $3.11. Its ordinary dividend is $0.36 per share and its share price is $40 per share. Its dividend yield equals 0.9%.

The term "authorized shares" is the total number of shares outstanding.

Ordinary shareholders always share equally with all other shareholders in all dividends.

No-par share to which the directors assign a value per share is called .

What is the effect of dividends on preference shares? Explain how a dividend is distributed in the case of cumulative preference shares with dividends in arrears.

Preference shares are often issued:

Identify and discuss the key differences between ordinary and preference shares. Both ordinary and preference shares can represent shares of ownership in a corporation.

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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