Question 1

If Valley Corporation issues 2,000 common shares for $140,000, which account will be credited?

Accepted Answer

A) Common Shares 
B) Retained Earnings 
C) Contributed Capital 
D) Cash 
A) Common Shares 
B) Retained Earnings 
C) Contributed Capital 
D) Cash

Question 2

The liability of a shareholder is usually limited to the shareholder's investment in the corporation.

Accepted Answer

A) True 
 B)False

Question 3

A corporation records a dividend-related liability

Accepted Answer

A) on the record date. 
B) on the payment date. 
C) when dividends are in arrears. 
D) on the declaration date. 
A) on the record date. 
B) on the payment date. 
C) when dividends are in arrears. 
D) on the declaration date.

Question 4

The effect of a stock dividend is to

Accepted Answer

A) decrease total assets and shareholders' equity. 
B) change the composition of shareholders' equity. 
C) decrease total assets and total liabilities. 
D) increase the book value per share of common shares. 
A) decrease total assets and shareholders' equity. 
B) change the composition of shareholders' equity. 
C) decrease total assets and total liabilities. 
D) increase the book value per share of common shares.

Question 5

When stock dividends are distributed

Accepted Answer

A) Stock Dividends Distributable is decreased. 
B) Retained Earnings is decreased. 
C) Common Shares is debited. 
D) no entry is necessary. 
A) Stock Dividends Distributable is decreased. 
B) Retained Earnings is decreased. 
C) Common Shares is debited. 
D) no entry is necessary.

Question 6

A company can control the market value of its shares.

Accepted Answer

A) True 
 B)False

Question 7

Preferred shares have a contractual preference over common shares in certain areas, but do not have the right to vote.

Accepted Answer

A) True 
 B)False

Question 8

At December 31, 2015, Gem Garments Inc.has 10,000, $5, cumulative preferred shares issued.If the board of directors declares a $40,000 dividend at this date

Accepted Answer

A) the company will still owe the preferred shareholders $10,000 and should record a dividend payable for this amount. 
B) the company will owe the preferred shareholders nothing further. 
C) $10,000 will be disclosed as dividends in arrears in the notes to the financial statements. 
D) the company still has to pay the preferred shareholders $50,000, regardless of what amount was declared. 
A) the company will still owe the preferred shareholders $10,000 and should record a dividend payable for this amount. 
B) the company will owe the preferred shareholders nothing further. 
C) $10,000 will be disclosed as dividends in arrears in the notes to the financial statements. 
D) the company still has to pay the preferred shareholders $50,000, regardless of what amount was declared.

Question 9

Which of the following statements about a 2 for 1 stock split is not true?

Accepted Answer

A) The market value of the shares will probably decrease. 
B) A shareholder with 200 shares before the split owns 400 shares after the split. 
C) Legal capital per share is reduced to half of what it was before the split. 
D) Total share capital increases. 
A) The market value of the shares will probably decrease. 
B) A shareholder with 200 shares before the split owns 400 shares after the split. 
C) Legal capital per share is reduced to half of what it was before the split. 
D) Total share capital increases.

Question 10

Retractable preferred shares are

Accepted Answer

A) included in contributed capital on the statement of financial position. 
B) callable at the corporation's option. 
C) never issued. 
D) presented under liabilities on the statement of financial position. 
A) included in contributed capital on the statement of financial position. 
B) callable at the corporation's option. 
C) never issued. 
D) presented under liabilities on the statement of financial position.

Question 11

The main purpose of a stock split is to

Accepted Answer

A) decrease the marketability of the stock by increasing the price. 
B) increase the marketability of the stock by increasing the price. 
C) increase the marketability of the stock by decreasing the price. 
D) reduce the number of issued shares. 
A) decrease the marketability of the stock by increasing the price. 
B) increase the marketability of the stock by increasing the price. 
C) increase the marketability of the stock by decreasing the price. 
D) reduce the number of issued shares.

Question 12

Mrs.Exe sold 200 shares of Tee Corp.to Mrs.Wye for $3,150.As a result of this transaction, Tee Corp.'s

Accepted Answer

A) shareholders' equity did not change. 
B) shareholders' equity increased by $3,150. 
C) shareholders' equity decreased by $3,150. 
D) assets increased by $3,150. 
A) shareholders' equity did not change. 
B) shareholders' equity increased by $3,150. 
C) shareholders' equity decreased by $3,150. 
D) assets increased by $3,150.

Question 13

Cambridge Corp.declared a 5% stock dividend.Will Wales owned 300 shares of Cambridge before the dividend.Cambridge shares were trading at $21 before the dividend.Which of the following will be true after the dividend is distributed?

Accepted Answer

A) The total market value of Will's shares was $6,300 before the stock dividend but will probably decrease after the stock dividend. 
B) The total market value of Will's shares was $6,300 before the stock dividend and $6,615 after the stock dividend. 
C) Will owned 300 shares before the stock dividend and 315 shares after the stock dividend. 
D) Fewer investors will be able to buy Cambridge shares. 
A) The total market value of Will's shares was $6,300 before the stock dividend but will probably decrease after the stock dividend. 
B) The total market value of Will's shares was $6,300 before the stock dividend and $6,615 after the stock dividend. 
C) Will owned 300 shares before the stock dividend and 315 shares after the stock dividend. 
D) Fewer investors will be able to buy Cambridge shares.

Question 14

Which of the following would not be true of a privately held corporation?

Accepted Answer

A) It is sometimes called a closely held corporation. 
B) Its shares are regularly traded on the Toronto Stock Exchange. 
C) It does not offer its shares for sale to the general public. 
D) It is usually smaller than a publicly held company. 
A) It is sometimes called a closely held corporation. 
B) Its shares are regularly traded on the Toronto Stock Exchange. 
C) It does not offer its shares for sale to the general public. 
D) It is usually smaller than a publicly held company.

Question 15

The sale of common shares should be recorded as a

Accepted Answer

A) debit to Retained Earnings and a credit to Cash. 
B) debit to Cash and a credit to Retained Earnings. 
C) debit to Cash and a credit to Common Shares. 
D) debit to Common Shares and a credit to Cash. 
A) debit to Retained Earnings and a credit to Cash. 
B) debit to Cash and a credit to Retained Earnings. 
C) debit to Cash and a credit to Common Shares. 
D) debit to Common Shares and a credit to Cash.

Question 16

At January 1, 2015, Jay Corporation had a credit balance of $5,450,000 in its retained earnings account.During the year, Jay paid $250,000 in dividends, reported profit of $560,000 and other comprehensive income of $750,000.The December 31 balance of retained earnings is

Accepted Answer

A) $5,760,000. 
B) $5,950,000. 
C) $6,200,000. 
D) $6,450,000. 
A) $5,760,000. 
B) $5,950,000. 
C) $6,200,000. 
D) $6,450,000.

Question 17

The statement of changes in equity discloses changes in total shareholders' equity for the period as well as changes in each shareholders' equity account.

Accepted Answer

A) True 
 B)False

Question 18

A loss

Accepted Answer

A) occurs if operating expenses exceed cost of goods sold. 
B) is not closed to Retained Earnings if it would result in a debit balance in that account. 
C) is closed to Retained Earnings even if it would result in a debit balance in that account. 
D) is closed to the Common Shares account. 
A) occurs if operating expenses exceed cost of goods sold. 
B) is not closed to Retained Earnings if it would result in a debit balance in that account. 
C) is closed to Retained Earnings even if it would result in a debit balance in that account. 
D) is closed to the Common Shares account.

Question 19

Dividends in arrears on cumulative preferred shares

Accepted Answer

A) are considered to be a non-current liability. 
B) are considered to be a current liability. 
C) only occur when preferred dividends have been declared. 
D) should be disclosed in the notes to the financial statements. 
A) are considered to be a non-current liability. 
B) are considered to be a current liability. 
C) only occur when preferred dividends have been declared. 
D) should be disclosed in the notes to the financial statements.

Question 20

The authorization of common shares

Accepted Answer

A) must be approved by Canada Revenue Agency. 
B) does not require a journal entry. 
C) increases shareholders' equity. 
D) decreases shareholders' equity. 
A) must be approved by Canada Revenue Agency. 
B) does not require a journal entry. 
C) increases shareholders' equity. 
D) decreases shareholders' equity.

If Valley Corporation issues 2,000 common shares for $140,000, which account will be credited?

The liability of a shareholder is usually limited to the shareholder's investment in the corporation.

A corporation records a dividend-related liability

The effect of a stock dividend is to

When stock dividends are distributed

A company can control the market value of its shares.

Preferred shares have a contractual preference over common shares in certain areas, but do not have the right to vote.

At December 31, 2015, Gem Garments Inc.has 10,000, $5, cumulative preferred shares issued.If the board of directors declares a $40,000 dividend at this date

Which of the following statements about a 2 for 1 stock split is not true?

Retractable preferred shares are

The main purpose of a stock split is to

Mrs.Exe sold 200 shares of Tee Corp.to Mrs.Wye for $3,150.As a result of this transaction, Tee Corp.'s

Cambridge Corp.declared a 5% stock dividend.Will Wales owned 300 shares of Cambridge before the dividend.Cambridge shares were trading at $21 before the dividend.Which of the following will be true after the dividend is distributed?

Which of the following would not be true of a privately held corporation?

The sale of common shares should be recorded as a

At January 1, 2015, Jay Corporation had a credit balance of $5,450,000 in its retained earnings account.During the year, Jay paid $250,000 in dividends, reported profit of $560,000 and other comprehensive income of $750,000.The December 31 balance of retained earnings is

The statement of changes in equity discloses changes in total shareholders' equity for the period as well as changes in each shareholders' equity account.

A loss

Dividends in arrears on cumulative preferred shares

The authorization of common shares

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

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Exam 11: Reporting and Analyzing Stockholders Equity

If Valley Corporation issues 2,000 common shares for $140,000, which account will be credited?

The liability of a shareholder is usually limited to the shareholder's investment in the corporation.

A corporation records a dividend-related liability

The effect of a stock dividend is to

When stock dividends are distributed

A company can control the market value of its shares.

Preferred shares have a contractual preference over common shares in certain areas, but do not have the right to vote.

At December 31, 2015, Gem Garments Inc.has 10,000, $5, cumulative preferred shares issued.If the board of directors declares a $40,000 dividend at this date

Which of the following statements about a 2 for 1 stock split is not true?

Retractable preferred shares are

The main purpose of a stock split is to

Mrs.Exe sold 200 shares of Tee Corp.to Mrs.Wye for $3,150.As a result of this transaction, Tee Corp.'s

Cambridge Corp.declared a 5% stock dividend.Will Wales owned 300 shares of Cambridge before the dividend.Cambridge shares were trading at $21 before the dividend.Which of the following will be true after the dividend is distributed?

Which of the following would not be true of a privately held corporation?

The sale of common shares should be recorded as a

At January 1, 2015, Jay Corporation had a credit balance of $5,450,000 in its retained earnings account.During the year, Jay paid $250,000 in dividends, reported profit of $560,000 and other comprehensive income of $750,000.The December 31 balance of retained earnings is

The statement of changes in equity discloses changes in total shareholders' equity for the period as well as changes in each shareholders' equity account.

A loss

Dividends in arrears on cumulative preferred shares

The authorization of common shares

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