Question 1

Declaration and distribution of a stock dividend does not affect the total amount of shareholders' equity.

Accepted Answer

A) True 
 B)False  True

Question 2

Evaluate dividend and earnings performance.

Accepted Answer

A company's dividend record can be evaluated by looking at what percentage of profit it chooses to pay out in dividends, as measured by the dividend payout ratio (dividends divided by profit) and the dividend yield ratio (dividends per share divided by the share price).

Question 3

The two ways that a corporation can be classified by ownership are

Accepted Answer

A) publicly held and privately held. 
B) shares and non-shares. 
C) federal and provincial. 
D) majority and minority. 
A) publicly held and privately held. 
B) shares and non-shares. 
C) federal and provincial. 
D) majority and minority. A

Question 4

Which of the following statements reflects the transferability of ownership rights in a corporation?

Accepted Answer

A) If a shareholder decides to transfer ownership, he/she must transfer all of his/her shares. 
B) A shareholder may dispose of part or all of his/her shares. 
C) A shareholder must obtain permission of the board of directors before selling shares. 
D) A shareholder must obtain permission from at least three other shareholders before selling shares. 
A) If a shareholder decides to transfer ownership, he/she must transfer all of his/her shares. 
B) A shareholder may dispose of part or all of his/her shares. 
C) A shareholder must obtain permission of the board of directors before selling shares. 
D) A shareholder must obtain permission from at least three other shareholders before selling shares.

Question 5

The sale of shares in a corporation by one shareholder to another affects the total capital of the corporation.

Accepted Answer

A) True 
 B)False

Question 6

Limited liability of shareholders means

Accepted Answer

A) dividends will be paid regardless of profits. 
B) creditors have no legal claim on a shareholder's personal assets. 
C) the life of the corporation is limited. 
D) deferral or reduction of taxes. 
A) dividends will be paid regardless of profits. 
B) creditors have no legal claim on a shareholder's personal assets. 
C) the life of the corporation is limited. 
D) deferral or reduction of taxes.

Question 7

The ability of a corporation to obtain capital is

Accepted Answer

A) enhanced because of limited liability and ease of share transferability. 
B) less than a partnership. 
C) restricted because of the limited life of the corporation. 
D) about the same as a proprietorship. 
A) enhanced because of limited liability and ease of share transferability. 
B) less than a partnership. 
C) restricted because of the limited life of the corporation. 
D) about the same as a proprietorship.

Question 8

Which of the following is not a significant date with respect to dividends?

Accepted Answer

A) the declaration date 
B) the incorporation date 
C) the record date 
D) the payment date 
A) the declaration date 
B) the incorporation date 
C) the record date 
D) the payment date

Question 9

Dividends in arrears on cumulative preferred shares

Accepted Answer

A) never have to be paid, even if common dividends are paid. 
B) must be paid before common shareholders can receive a dividend. 
C) should be recorded as a current liability until they are paid. 
D) enable the preferred shareholders to share equally in corporate profits with the common shareholders. 
A) never have to be paid, even if common dividends are paid. 
B) must be paid before common shareholders can receive a dividend. 
C) should be recorded as a current liability until they are paid. 
D) enable the preferred shareholders to share equally in corporate profits with the common shareholders.

Question 10

Which of the following is false about the dividend yield ratio?

Accepted Answer

A) Dividend yield ratio = Dividends per share ÷ Market price per share 
B) Measures the profit generated by each share for the shareholder based on the market price of the shares 
C) A low dividend yield is neither bad nor good by itself 
D) Dividend yield ratio = Market price per share ÷ Dividends per share 
A) Dividend yield ratio = Dividends per share ÷ Market price per share 
B) Measures the profit generated by each share for the shareholder based on the market price of the shares 
C) A low dividend yield is neither bad nor good by itself 
D) Dividend yield ratio = Market price per share ÷ Dividends per share

Question 11

A disadvantage of the corporate form of organization is

Accepted Answer

A) its status as a separate legal entity. 
B) continuous existence. 
C) government regulation. 
D) ease of transfer of ownership. 
A) its status as a separate legal entity. 
B) continuous existence. 
C) government regulation. 
D) ease of transfer of ownership.

Question 12

A corporation acts under its' own name rather than in the name of its shareholders.

Accepted Answer

A) True 
 B)False

Question 13

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

Accepted Answer

A) decrease both total liabilities and shareholders' equity. 
B) increase both total expenses and total liabilities. 
C) increase both total assets and shareholders' equity. 
D) decrease both total assets and shareholders' equity. 
A) decrease both total liabilities and shareholders' equity. 
B) increase both total expenses and total liabilities. 
C) increase both total assets and shareholders' equity. 
D) decrease both total assets and shareholders' equity.

Question 14

The declaration and distribution of a stock dividend will

Accepted Answer

A) increase total shareholders' equity. 
B) increase total assets. 
C) decrease total assets. 
D) have no effect on total assets. 
A) increase total shareholders' equity. 
B) increase total assets. 
C) decrease total assets. 
D) have no effect on total assets.

Question 15

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Accepted Answer

A) True 
 B)False

Question 16

If a corporation reports a profit, it should be closed to retained earnings.If it reports a loss, it should be closed to a contributed capital account.

Accepted Answer

A) True 
 B)False

Question 17

Under the corporate form of business organization

Accepted Answer

A) a shareholder is personally liable for the debts of the corporation. 
B) a shareholder's acts can bind the corporation even though he/she has not been appointed as an agent of the corporation. 
C) the corporation's life is continuous. 
D) shareholders wishing to sell their shares must get the approval of other shareholders. 
A) a shareholder is personally liable for the debts of the corporation. 
B) a shareholder's acts can bind the corporation even though he/she has not been appointed as an agent of the corporation. 
C) the corporation's life is continuous. 
D) shareholders wishing to sell their shares must get the approval of other shareholders.

Question 18

Accumulated other comprehensive income is reported in the shareholders' equity section of the statement of financial position for a publicly-traded company.

Accepted Answer

A) True 
 B)False

Question 19

For a corporation reporting under IFRS, when shares are issued for a non-cash consideration and a ready market for the shares exists, they are recorded at

Accepted Answer

A) zero. 
B) the fair value of the shares. 
C) the fair value of the assets acquired. 
D) the average of the fair value of the shares and the fair value of the assets acquired. 
A) zero. 
B) the fair value of the shares. 
C) the fair value of the assets acquired. 
D) the average of the fair value of the shares and the fair value of the assets acquired.

Question 20

Coombs Corp.declared a two-for-one stock split.Solly Fogarty owned 500 shares of Coombs that were trading for $20 each before the split.Which of the following is likely to be true after the split?

Accepted Answer

A) The number of shares Solly owns will increase by 50%. 
B) The market price per share will drop by 50%. 
C) The total market value of Solly's shares will double. 
D) The market price per share will increase by 100%. 
A) The number of shares Solly owns will increase by 50%. 
B) The market price per share will drop by 50%. 
C) The total market value of Solly's shares will double. 
D) The market price per share will increase by 100%.

Declaration and distribution of a stock dividend does not affect the total amount of shareholders' equity.

Evaluate dividend and earnings performance.

The two ways that a corporation can be classified by ownership are

Which of the following statements reflects the transferability of ownership rights in a corporation?

The sale of shares in a corporation by one shareholder to another affects the total capital of the corporation.

Limited liability of shareholders means

The ability of a corporation to obtain capital is

Which of the following is not a significant date with respect to dividends?

Dividends in arrears on cumulative preferred shares

Which of the following is false about the dividend yield ratio?

A disadvantage of the corporate form of organization is

A corporation acts under its' own name rather than in the name of its shareholders.

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

The declaration and distribution of a stock dividend will

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

If a corporation reports a profit, it should be closed to retained earnings.If it reports a loss, it should be closed to a contributed capital account.

Under the corporate form of business organization

Accumulated other comprehensive income is reported in the shareholders' equity section of the statement of financial position for a publicly-traded company.

For a corporation reporting under IFRS, when shares are issued for a non-cash consideration and a ready market for the shares exists, they are recorded at

Coombs Corp.declared a two-for-one stock split.Solly Fogarty owned 500 shares of Coombs that were trading for $20 each before the split.Which of the following is likely to be true after the split?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Long-Lived Assets

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters

Exam 11: Reporting and Analyzing Stockholders Equity

Declaration and distribution of a stock dividend does not affect the total amount of shareholders' equity.

Evaluate dividend and earnings performance.

The two ways that a corporation can be classified by ownership are

Which of the following statements reflects the transferability of ownership rights in a corporation?

The sale of shares in a corporation by one shareholder to another affects the total capital of the corporation.

Limited liability of shareholders means

The ability of a corporation to obtain capital is

Which of the following is not a significant date with respect to dividends?

Dividends in arrears on cumulative preferred shares

Which of the following is false about the dividend yield ratio?

A disadvantage of the corporate form of organization is

A corporation acts under its' own name rather than in the name of its shareholders.

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

The declaration and distribution of a stock dividend will

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

If a corporation reports a profit, it should be closed to retained earnings.If it reports a loss, it should be closed to a contributed capital account.

Under the corporate form of business organization

Accumulated other comprehensive income is reported in the shareholders' equity section of the statement of financial position for a publicly-traded company.

For a corporation reporting under IFRS, when shares are issued for a non-cash consideration and a ready market for the shares exists, they are recorded at

Coombs Corp.declared a two-for-one stock split.Solly Fogarty owned 500 shares of Coombs that were trading for $20 each before the split.Which of the following is likely to be true after the split?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Long-Lived Assets

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters