Question 1

Explain the options available to a corporation that issues share subscriptions where partial payment has been received but the subscriber defaults on the balance.

Accepted Answer

The answer of Explain the options available to a corporation...

Question 2

When retained earnings are restricted, they must also be appropriated.

Accepted Answer

A) True 
 B)False

Question 3

Both the appropriation and restriction of retained earnings are the result of legal or contractual requirements to do so.

Accepted Answer

A) True 
 B)False

Question 4

Issued share capital refers to the number of shares:

Accepted Answer

A) Outstanding. 
B) That may be issued according to the corporate charter. 
C) Outstanding plus all shares held as treasury shares. 
D) Outstanding less all shares held as treasury shares.

Question 5

XHC had only two share transactions.Initially, XHC issued 1,000 common shares, at $15 per share.XHC later bought back 200 shares at $16 per share.Under the
Single-transaction method, what is the amount that should be recorded in the treasury stock account?

Accepted Answer

A) $3,600 
B) $3,200 
C) $2,000 
D) $3,000

Question 6

When stock rights are issued to current shareholders, it may require more than one such right to later acquire one additional share of the stock covered by the rights.

Accepted Answer

A) True 
 B)False

Question 7

Cash dividends usually are declared on one date and paid on a subsequent date to shareholders of record on some intermediate date.On which of the following dates should an accrual basis shareholder recognize investment revenue?

Accepted Answer

A) Record date 
B) Either record date or declaration date 
C) Declaration date 
D) Payment date

Question 8

Several years ago, a corporation set up a reserve for storm losses in the amount of $300,000 as an appropriation of retained earnings.During the current year, the company suffered a $85,000 hurricane loss that was not covered by insurance.The firm reduces appropriations when their purpose has been fulfilled.Give the entry(s)to record the loss and provide any appropriate explanation.

Accepted Answer

The answer of Several years ago, a corporation set up...

Question 9

On January 10, 2013, ZOE Corporation declared a cash dividend when the related shares were selling for $10 per share.ZOE prepared the list of shareholders on February 10, 2013 at which time the shares were still selling for $10 per share.However, on February 11, 2013 the shares were selling for $8 per share.The dividend was paid on March 1, 2013 when the shares were selling for $9 per share.The ex-dividend date must have been:

Accepted Answer

A) March 1/13. 
B) February 10/13. 
C) February 11/13. 
D) January 10/13.

Question 10

Preferred shares generally have fewer voting rights than common shareholders but receive preferential treatment (relative to the common shareholders)in the event of the company's liquidation.

Accepted Answer

A) True 
 B)False

Question 11

All Contributed Capital accounts may carry either a debit or a credit balance, depending on the transactions from which the account balance originated.

Accepted Answer

A) True 
 B)False

Question 12

The dollar amount of total shareholders' equity remains the same for the:

Accepted Answer

A) Issuance of nonconvertible bonds with detachable stock purchase warrants. 
B) Declaration of a cash dividend. 
C) Declaration of a stock dividend. 
D) Issuance of preferred shares in exchange for convertible debentures.

Question 13

ABC declared a common stock dividend on March 10, at which time its shares were selling for $15 per share and 10,500 shares were outstanding.After the dividend, because only 13,650 shares were outstanding, some shareholders received fractional share rights.If the provisions of the dividend provided that one share was to be issued for each three shares previously owned, there must have been:

Accepted Answer

A) Fractional shares outstanding not determinable based on the information given. 
B) 350 fractional share rights outstanding. 
C) 117 fractional share rights outstanding. 
D) 1,050 fractional share rights outstanding.

Question 14

Which of the following is not a basic right of shareholders?

Accepted Answer

A) To participate in the profits of the corporation through dividends declared by the board of directors. 
B) To share in the distribution of assets of the corporation at liquidation or through liquidating dividends. 
C) To participate in the management of the corporation through taking part in and voting in shareholders' meetings. 
D) To inspect the books of account and to insist upon an audit in the event of dissatisfaction with results revealed by such inspection. 
E) To sell shares in the corporation at a price exceeding its cost.

Question 15

Under IFRS, the treatment of any of a company's foreign subsidiary is dependent upon:

Accepted Answer

A) The functional currency of the subsidiary. 
B) The nature and extent of the parent company's relationship with the subsidiary. 
C) Managerial judgement. 
D) Whether the subsidiary is integrated or self-sustaining.

Question 16

XYZ reported the following on its December 31, 2014, balance sheet: common shares, no-par, $200,000; unappropriated retained earnings, $40,000; appropriation of retained earnings for bond sinking fund, $10,000; and reserve for possible future inventory losses, $5,000.Therefore, the last line on the retained earnings statement, total appropriated and unappropriated retained earnings should be:

Accepted Answer

A) $10,000 
B) $55,000 
C) $15,000 
D) $40,000

Question 17

Before a company can issue a property dividend in shares of another company, it must ensure that the shares are recorded at market value.The dividend is then paid out of the company's contributed capital accounts rather than its retained earnings.

Accepted Answer

A) True 
 B)False

Question 18

SXC reported the following data on its 2014 statement of financial position:  If the average price paid for all of the common shares sold and subscribed were $5.00, the total number of sold and subscribed shares was:

Accepted Answer

A) 44,000 
B) 44,400 
C) 40,000 
D) 40,400 
E) None of these answers are correct.

Question 19

On October 1, 2019, XBC declared a dividend to its common shareholders by issuing one share of YTC, preferred share, $.60 no-par (held as a long-term investment)for each of the 15,000 common shares of XBC.On the declaration date, the YTC shares were selling at $7 per share.The YTC shares originally were purchased by XBC at $9 per share; they were transferred to the XBC shareholders on January 30, 2000, when their quoted market price was $7.50 per share.Give the following entries for XBC:
(a)At date of declaration:
(b)At date of payment:

Accepted Answer

The answer of On October 1, 2019, XBC declared a...

Question 20

The contributed capital accounts should be classified by source.

Accepted Answer

A) True 
 B)False

Exam 14: Shareholders Equity

Explain the options available to a corporation that issues share subscriptions where partial payment has been received but the subscriber defaults on the balance.

When retained earnings are restricted, they must also be appropriated.

Both the appropriation and restriction of retained earnings are the result of legal or contractual requirements to do so.

Issued share capital refers to the number of shares:

XHC had only two share transactions.Initially, XHC issued 1,000 common shares, at $15 per share.XHC later bought back 200 shares at $16 per share.Under the Single-transaction method, what is the amount that should be recorded in the treasury stock account?

When stock rights are issued to current shareholders, it may require more than one such right to later acquire one additional share of the stock covered by the rights.

Cash dividends usually are declared on one date and paid on a subsequent date to shareholders of record on some intermediate date.On which of the following dates should an accrual basis shareholder recognize investment revenue?

Preferred shares generally have fewer voting rights than common shareholders but receive preferential treatment (relative to the common shareholders)in the event of the company's liquidation.

All Contributed Capital accounts may carry either a debit or a credit balance, depending on the transactions from which the account balance originated.

The dollar amount of total shareholders' equity remains the same for the:

Which of the following is not a basic right of shareholders?

Under IFRS, the treatment of any of a company's foreign subsidiary is dependent upon:

Before a company can issue a property dividend in shares of another company, it must ensure that the shares are recorded at market value.The dividend is then paid out of the company's contributed capital accounts rather than its retained earnings.

SXC reported the following data on its 2014 statement of financial position: If the average price paid for all of the common shares sold and subscribed were $5.00, the total number of sold and subscribed shares was:

The contributed capital accounts should be classified by source.