Question 1

When preference shares share ratably with the ordinary shareholders in any profit distributions beyond the prescribed rate this is known as the

Accepted Answer

A)  Cumulative feature.
B)  Participating feature.
C)  Callable feature.
D)  Redeemable feature.E) A) and D)
F) A) and B)

Question 2

A corporation is incorporated in only one country regardless of the number of countries in which it operates.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following features of preference shares makes the security more like debt than an equity instrument?

Accepted Answer

A)  Participating
B)  Voting
C)  Redeemable
D)  NoncumulativeE) C) and D)
F) A) and B)

Question 4

Which of the following represents the total number of shares that a corporation may issue under the terms of its charter?

Accepted Answer

A)  authorized shares
B)  issued shares
C)  unissued shares
D)  outstanding sharesE) C) and D)
F) A) and D)

Question 5

Cumulative preference dividends in arrears should be shown in a corporation's statement of financial position as

Accepted Answer

A)  an increase in current liabilities.
B)  an increase in equity.
C)  a footnote.
D)  an increase in current liabilities for the current portion and non-current liabilities for the long-term portion.E) None of the above
F) A) and D)

Question 6

Which one of the following disclosures should be made in the equity section of the statement of financial position, rather than in the notes to the financial statements?

Accepted Answer

A)  Dividend preferences
B)  Liquidation preferences
C)  Call prices
D)  Conversion or exercise pricesE) C) and D)
F) B) and D)

Question 7

A feature common to both share splits and share dividends is

Accepted Answer

A)  a transfer to earned capital of a corporation.
B)  that there is no effect on total equity.
C)  an increase in total liabilities of a corporation.
D)  a reduction in the contributed capital of a corporation.E) All of the above
F) C) and D)

Question 8

Shares that have a fixed per-share amount printed on each share certificate are called

Accepted Answer

A)  stated value shares.
B)  fixed value shares.
C)  uniform value shares.
D)  par value shares.E) A) and D)
F) B) and C)

Question 9

How should a "gain" from the sale of treasury shares be reflected when using the cost method of recording treasury shares transactions?

Accepted Answer

A)  As other income shown on the income statement.
B)  As share premium from treasury share transactions.
C)  As an increase in the amount shown for share capital.
D)  As an increase in the retained earnings amount.E) B) and D)
F) A) and C)

Question 10

Which of the following is a required statement under IFRS?

Accepted Answer

The answer of Which of the following is a required...

Question 11

The cost method records all transactions in treasury shares at their cost and reports the treasury shares as a deduction from ordinary shares.

Accepted Answer

A) True 
 B)False

Question 12

When treasury shares are purchased for more than the par value of the shares and the cost method is used to account for treasury shares, what account(s)  should be debited?

Accepted Answer

A)  Treasury shares for the par value and share premium for the excess of the purchase price over the par value.
B)  share premium for the purchase price.
C)  Treasury shares for the purchase price.
D)  Treasury shares for the par value and retained earnings for the excess of the purchase price over the par value.E) B) and C)
F) All of the above

Question 13

At the date of declaration of an ordinary share dividend, the entry should not include

Accepted Answer

A)  a credit to Share Capital-Ordinary.
B)  a credit to Ordinary Share Dividend Distributable.
C)  a debit to Retained Earnings.
D)  All of these are acceptable.E) All of the above
F) None of the above

Question 14

If management wishes to "capitalize" part of the earnings, it may issue a

Accepted Answer

A)  cash dividend.
B)  share dividend.
C)  property dividend.
D)  liquidating dividend.E) A) and D)
F) C) and D)

Question 15

Shareholders of a business enterprise are said to be the residual owners.The term residual owner means that shareholders

Accepted Answer

A)  are entitled to a dividend every year in which the business earns a profit.
B)  have the rights to specific assets of the business.
C)  bear the ultimate risks and uncertainties and receive the benefits of enterprise ownership.
D)  can negotiate individual contracts on behalf of the enterprise.E) A) and D)
F) C) and D)

Question 16

In January 2015, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par ordinary shares for $15 per share.On July 1, 2015, Finley Corporation reacquired 1,000 shares of its outstanding shares for $12 per share.The acquisition of these treasury shares

Accepted Answer

A)  decreased total shareholders' equity.
B)  increased total shareholders' equity.
C)  did not change total shareholders' equity.
D)  decreased the number of issued shares.E) A) and C)
F) A) and B)

Question 17

A primary source of shareholders' equity is

Accepted Answer

A)  income retained by the corporation.
B)  appropriated retained earnings.
C)  contributions by shareholders.
D)  both income retained by the corporation and contributions by holders.E) A) and B)
F) A) and C)

Question 18

Many companies pay dividends in amounts equal to their legally available retained earnings.

Accepted Answer

A) True 
 B)False

Exam 15: Equity

Which one of the following disclosures should be made in the equity section of the statement of financial position, rather than in the notes to the financial statements?

Correct Answer
verified

Shares that have a fixed per-share amount printed on each share certificate are called

Correct Answer
verified

Which of the following features of preference shares makes the security more like debt than an equity instrument?

Correct Answer
verified

Cumulative preference dividends in arrears should be shown in a corporation's statement of financial position as

Correct Answer
verified

In January 2015, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par ordinary shares for $15 per share.On July 1, 2015, Finley Corporation reacquired 1,000 shares of its outstanding shares for $12 per share.The acquisition of these treasury shares

Correct Answer
verified

A primary source of shareholders' equity is

Correct Answer
verified

Which of the following is a required statement under IFRS?

Correct Answer
verified

At the date of declaration of an ordinary share dividend, the entry should not include

Correct Answer
verified

Which of the following represents the total number of shares that a corporation may issue under the terms of its charter?

Correct Answer
verified

When treasury shares are purchased for more than the par value of the shares and the cost method is used to account for treasury shares, what account(s) should be debited?

Correct Answer
verified

A feature common to both share splits and share dividends is

Correct Answer
verified

A corporation is incorporated in only one country regardless of the number of countries in which it operates.

Correct Answer
verified

Many companies pay dividends in amounts equal to their legally available retained earnings.

Correct Answer
verified

The cost method records all transactions in treasury shares at their cost and reports the treasury shares as a deduction from ordinary shares.

Correct Answer
verified

When preference shares share ratably with the ordinary shareholders in any profit distributions beyond the prescribed rate this is known as the

Correct Answer
verified

If management wishes to "capitalize" part of the earnings, it may issue a

Correct Answer
verified

Shareholders of a business enterprise are said to be the residual owners.The term residual owner means that shareholders

Correct Answer
verified

How should a "gain" from the sale of treasury shares be reflected when using the cost method of recording treasury shares transactions?

Correct Answer
verified

Exam 15: Equity

Which one of the following disclosures should be made in the equity section of the statement of financial position, rather than in the notes to the financial statements?

Correct AnswerverifiedShow Answer

Shares that have a fixed per-share amount printed on each share certificate are called

Correct AnswerverifiedShow Answer

Which of the following features of preference shares makes the security more like debt than an equity instrument?

Correct AnswerverifiedShow Answer

Cumulative preference dividends in arrears should be shown in a corporation's statement of financial position as

Correct AnswerverifiedShow Answer

In January 2015, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par ordinary shares for $15 per share.On July 1, 2015, Finley Corporation reacquired 1,000 shares of its outstanding shares for $12 per share.The acquisition of these treasury shares

Correct AnswerverifiedShow Answer

A primary source of shareholders' equity is

Correct AnswerverifiedShow Answer

Which of the following is a required statement under IFRS?

Correct AnswerverifiedShow Answer

At the date of declaration of an ordinary share dividend, the entry should not include

Correct AnswerverifiedShow Answer

Which of the following represents the total number of shares that a corporation may issue under the terms of its charter?

Correct AnswerverifiedShow Answer

When treasury shares are purchased for more than the par value of the shares and the cost method is used to account for treasury shares, what account(s) should be debited?

Correct AnswerverifiedShow Answer

A feature common to both share splits and share dividends is

Correct AnswerverifiedShow Answer

A corporation is incorporated in only one country regardless of the number of countries in which it operates.

Correct AnswerverifiedShow Answer

Many companies pay dividends in amounts equal to their legally available retained earnings.

Correct AnswerverifiedShow Answer

The cost method records all transactions in treasury shares at their cost and reports the treasury shares as a deduction from ordinary shares.

Correct AnswerverifiedShow Answer

When preference shares share ratably with the ordinary shareholders in any profit distributions beyond the prescribed rate this is known as the

Correct AnswerverifiedShow Answer

If management wishes to "capitalize" part of the earnings, it may issue a

Correct AnswerverifiedShow Answer

Shareholders of a business enterprise are said to be the residual owners.The term residual owner means that shareholders

Correct AnswerverifiedShow Answer

How should a "gain" from the sale of treasury shares be reflected when using the cost method of recording treasury shares transactions?

Correct AnswerverifiedShow Answer

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