Question 1

Retained earnings:

Accepted Answer

A)   Represent an amount of cash available to pay shareholders.
B)   Are part of the income statement.
C)   Are the cumulative net profits or losses minus dividends paid since the date of incorporation.
D)   Are the cumulative net profits or losses minus dividends paid since the date of incorporation, and are part of shareholders' equity.
E)   All of these answers are correct. D

Question 2

The amount of income earned by each outstanding common share of a corporation is known as:

Accepted Answer

A)   Earnings per share.
B)   Income from continuing operations.
C)   Dividends payable.
D)   A share dividend.
E)   Restricted retained earnings. A

Question 3

A share dividend transfers:

Accepted Answer

A)   Retained earnings to contributed capital.
B)   Contributed capital to retained earnings.
C)   Assets to contributed capital.
D)   Retained earnings to assets.
E)   Contributed capital to assets. A

Question 4

A share dividend reduces a corporation's assets and equity.

Accepted Answer

A) True 
 B)False

Question 5

A share dividend is a corporation's distribution of its own shares to its shareholders without receiving any payment in return.

Accepted Answer

A) True 
 B)False

Question 6

A company can change from one acceptable accounting principle to another as long as the change improves the usefulness of information in its financial statements or it isrequired by IFRS.

Accepted Answer

A) True 
 B)False

Question 7

Earnings per share is calculated by dividing the number of common shares outstanding by net income.

Accepted Answer

A) True 
 B)False

Question 8

Restricted retained earnings must be disclosed on the balance sheet or the statement of changes in equity, or in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 9

A cash dividend does not reduce a corporation's assets or equity, while a share dividend reduces both.

Accepted Answer

A) True 
 B)False

Question 10

Changes in accounting estimates are:

Accepted Answer

A)   Accounted for in the period of the change and future periods.
B)   Considered to be a change in accounting policy.
C)   Considered to be accounting errors.
D)   Accounted for with a cumulative "catch-up" adjustment.
E)   Reported by retrospective restatement of financial statements.

Question 11

A share dividend is not a liability on the balance sheet because it does not require a distribution of assets.

Accepted Answer

A) True 
 B)False

Question 12

Describe share dividends and share splits.

Accepted Answer

The answer of Describe share dividends and share splits....

Question 13

Retained earnings are part of the shareholders' claim on the company's net assets.

Accepted Answer

A) True 
 B)False

Question 14

If a company's activities include operations that are being discontinued, the income or loss effects of the discontinued operations are included on the income statement inincome from continuing operations.

Accepted Answer

A) True 
 B)False

Question 15

A share dividend:

Accepted Answer

A)   Is a distribution of additional shares to its shareholders without receiving any payment.
B)   Transfers a portion of equity from retained earnings to contributed capital.
C)   Does not reduce a corporation's assets and equity.
D)   Is often referred to as a stock dividend.
E)   All of these answers are correct.

Question 16

A share dividend capitalizes retained earnings because it decreases a company's contributed capital.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

When a corporation calls in its outstanding shares and issues more than one new share in exchange for each old share, this is a:

Accepted Answer

A)   Reverse share split.
B)   Cash dividend.
C)   Liquidating dividend.
D)   Share dividend.
E)   Share split.

Question 19

The journal entry to record $10,000 in a share dividend on the declaration date can include a debit to cash dividends declared and a credit to dividends payable.

Accepted Answer

A) True 
 B)False

Question 20

Retirement of shares:

Accepted Answer

A)   Is accounted for like SPLIT shares.
B)   Reduces the number of issued shares and is permissible under law if the interest of the shareholders is not jeopardized.
C)   Is not permissible under law if the interest of the shareholders is not jeopardized.
D)   Reduces the number of issued shares.
E)   All of these answers are correct.

Exam 13: Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Retained earnings:

The amount of income earned by each outstanding common share of a corporation is known as:

A share dividend transfers:

A share dividend reduces a corporation's assets and equity.

A share dividend is a corporation's distribution of its own shares to its shareholders without receiving any payment in return.

A company can change from one acceptable accounting principle to another as long as the change improves the usefulness of information in its financial statements or it isrequired by IFRS.

Earnings per share is calculated by dividing the number of common shares outstanding by net income.

Restricted retained earnings must be disclosed on the balance sheet or the statement of changes in equity, or in the notes to the financial statements.

A cash dividend does not reduce a corporation's assets or equity, while a share dividend reduces both.

Changes in accounting estimates are:

A share dividend is not a liability on the balance sheet because it does not require a distribution of assets.

Describe share dividends and share splits.

Retained earnings are part of the shareholders' claim on the company's net assets.

If a company's activities include operations that are being discontinued, the income or loss effects of the discontinued operations are included on the income statement inincome from continuing operations.

A share dividend:

A share dividend capitalizes retained earnings because it decreases a company's contributed capital.

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

When a corporation calls in its outstanding shares and issues more than one new share in exchange for each old share, this is a:

The journal entry to record $10,000 in a share dividend on the declaration date can include a debit to cash dividends declared and a credit to dividends payable.

Retirement of shares: