Question 1

Corporations generally issue stock dividends in order to

Accepted Answer

A) increase the market price per share. 
B) exceed shareholders' dividend expectations. 
C) increase the marketability of the shares. 
D) decrease the amount of capital in the corporation. 
A) increase the market price per share. 
B) exceed shareholders' dividend expectations. 
C) increase the marketability of the shares. 
D) decrease the amount of capital in the corporation. C

Question 2

A debit balance in retained earnings is called a

Accepted Answer

A) loss. 
B) capital surplus. 
C) deficit. 
D) contributed capital. 
A) loss. 
B) capital surplus. 
C) deficit. 
D) contributed capital. C

Question 3

Stock dividends and stock splits have the following effects on retained earnings:

Accepted Answer

B

Question 4

Which of the following statements is considered an advantage of the corporate form of organization?

Accepted Answer

A) Additional income tax 
B) Government regulations 
C) Limited liability of shareholders 
D) Separation of ownership and management 
A) Additional income tax 
B) Government regulations 
C) Limited liability of shareholders 
D) Separation of ownership and management

Question 5

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 6

$3 cumulative preferred shares means that each preferred shareholder is eligible to receive a quarterly dividend of $3 per share.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Following is the shareholders' equity section of the statement of financial position of Brownlow Corporation:   The entry to record Brownlow's repurchase and retirement of 1,000 of its common shares at $2 per share includes:

Accepted Answer

A) a debit to Common Shares for $2,000. 
B) a debit to Common Shares for $1,000. 
C) a credit to Contributed Capital-Reacquisition of Shares for $1,000. 
D) a debit to Contributed Capital-Reacquisition of Shares for $1,000. 
A) a debit to Common Shares for $2,000. 
B) a debit to Common Shares for $1,000. 
C) a credit to Contributed Capital-Reacquisition of Shares for $1,000. 
D) a debit to Contributed Capital-Reacquisition of Shares for $1,000.

Question 9

When preferred shares are cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Accepted Answer

A) True 
 B)False

Question 10

The payout ratio is calculated by dividing

Accepted Answer

A) total cash dividends paid by retained earnings. 
B) dividends paid per share by profit. 
C) total cash dividends paid by profit. 
D) dividends paid per share by year-end share price. 
A) total cash dividends paid by retained earnings. 
B) dividends paid per share by profit. 
C) total cash dividends paid by profit. 
D) dividends paid per share by year-end share price.

Question 11

Which one of the following events would not require a journal entry on a corporation's books?

Accepted Answer

A) 2 for 1 stock split. 
B) 100% stock dividend. 
C) 2% stock dividend. 
D) $1 per share cash dividend. 
A) 2 for 1 stock split. 
B) 100% stock dividend. 
C) 2% stock dividend. 
D) $1 per share cash dividend.

Question 12

A shareholder owning common shares has the right to vote in the election of the board of directors.

Accepted Answer

A) True 
 B)False

Question 13

If a corporation declares a 10% stock dividend on its common shares, the account to be debited on the date of declaration is

Accepted Answer

A) Common Stock Dividends Distributable. 
B) Common Shares. 
C) Share Capital. 
D) Stock Dividends. 
A) Common Stock Dividends Distributable. 
B) Common Shares. 
C) Share Capital. 
D) Stock Dividends.

Question 14

Return on common shareholders' equity is a ratio that

Accepted Answer

A) is calculated by dividing profit plus preferred dividends by average common shareholders' equity. 
B) shows the relationship between profit available for common shareholders and average common shareholders' equity. 
C) cannot be calculated if the company has preferred shares in addition to common shares. 
D) is calculated by dividing profit plus preferred dividends by average common shareholders' equity and shows the relationship between profit available for common shareholders and average common shareholders' equity. 
A) is calculated by dividing profit plus preferred dividends by average common shareholders' equity. 
B) shows the relationship between profit available for common shareholders and average common shareholders' equity. 
C) cannot be calculated if the company has preferred shares in addition to common shares. 
D) is calculated by dividing profit plus preferred dividends by average common shareholders' equity and shows the relationship between profit available for common shareholders and average common shareholders' equity.

Question 15

A stock dividend results in a decrease in

Accepted Answer

A) current liabilities. 
B) profit. 
C) share capital. 
D) retained earnings. 
A) current liabilities. 
B) profit. 
C) share capital. 
D) retained earnings.

Question 16

A corporate board of directors does not generally

Accepted Answer

A) select officers. 
B) formulate operating policies. 
C) declare dividends. 
D) execute policy. 
A) select officers. 
B) formulate operating policies. 
C) declare dividends. 
D) execute policy.

Question 17

Return on common shareholders' equity is calculated by dividing profit by ending shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 18

It is not possible for diluted earnings per share to be higher than basic earnings per share.

Accepted Answer

A) True 
 B)False

Question 19

Under IFRS, which of the following describes how other comprehensive income should be reported?

Accepted Answer

A) Must be reported in a statement of comprehensive income 
B) Should not be reported in the financial statements, but should only be disclosed in the footnotes 
C) Must be reported in the income statement 
D) Must be reported in the shareholders' equity section of the statement of financial position 
A) Must be reported in a statement of comprehensive income 
B) Should not be reported in the financial statements, but should only be disclosed in the footnotes 
C) Must be reported in the income statement 
D) Must be reported in the shareholders' equity section of the statement of financial position

Question 20

An initial public offering occurs the first time a corporation sells shares to the public.

Accepted Answer

A) True 
 B)False

Corporations generally issue stock dividends in order to

A debit balance in retained earnings is called a

Stock dividends and stock splits have the following effects on retained earnings:

Which of the following statements is considered an advantage of the corporate form of organization?

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

$3 cumulative preferred shares means that each preferred shareholder is eligible to receive a quarterly dividend of $3 per share.

Dividends in arrears on cumulative preferred shares

Following is the shareholders' equity section of the statement of financial position of Brownlow Corporation: The entry to record Brownlow's repurchase and retirement of 1,000 of its common shares at $2 per share includes:

When preferred shares are cumulative, preferred dividends not declared in a given period are called dividends in arrears.

The payout ratio is calculated by dividing

Which one of the following events would not require a journal entry on a corporation's books?

A shareholder owning common shares has the right to vote in the election of the board of directors.

If a corporation declares a 10% stock dividend on its common shares, the account to be debited on the date of declaration is

Return on common shareholders' equity is a ratio that

A stock dividend results in a decrease in

A corporate board of directors does not generally

Return on common shareholders' equity is calculated by dividing profit by ending shareholders' equity.

It is not possible for diluted earnings per share to be higher than basic earnings per share.

Under IFRS, which of the following describes how other comprehensive income should be reported?

An initial public offering occurs the first time a corporation sells shares to the public.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 11: Reporting and Analyzing Shareholders Equity

Corporations generally issue stock dividends in order to

A debit balance in retained earnings is called a

Stock dividends and stock splits have the following effects on retained earnings:

Which of the following statements is considered an advantage of the corporate form of organization?

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

$3 cumulative preferred shares means that each preferred shareholder is eligible to receive a quarterly dividend of $3 per share.

Dividends in arrears on cumulative preferred shares

Following is the shareholders' equity section of the statement of financial position of Brownlow Corporation: The entry to record Brownlow's repurchase and retirement of 1,000 of its common shares at $2 per share includes:

When preferred shares are cumulative, preferred dividends not declared in a given period are called dividends in arrears.

The payout ratio is calculated by dividing

Which one of the following events would not require a journal entry on a corporation's books?

A shareholder owning common shares has the right to vote in the election of the board of directors.

If a corporation declares a 10% stock dividend on its common shares, the account to be debited on the date of declaration is

Return on common shareholders' equity is a ratio that

A stock dividend results in a decrease in

A corporate board of directors does not generally

Return on common shareholders' equity is calculated by dividing profit by ending shareholders' equity.

It is not possible for diluted earnings per share to be higher than basic earnings per share.

Under IFRS, which of the following describes how other comprehensive income should be reported?

An initial public offering occurs the first time a corporation sells shares to the public.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters