Question 1

The number of shares that may be issued according to the corporation's articles of incorporation is referred to as the

Accepted Answer

A) authorized shares. 
B) issued shares. 
C) unissued shares. 
D) redeemable shares. 
A) authorized shares. 
B) issued shares. 
C) unissued shares. 
D) redeemable shares.

Question 2

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 3

At December 31, 2012, 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 4

Total comprehensive income equals profit plus other comprehensive income.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) general and limited. 
B) profit and not-for-profit. 
C) federal and provincial. 
D) publicly held and privately held. 
A) general and limited. 
B) profit and not-for-profit. 
C) federal and provincial. 
D) publicly held and privately held.

Question 6

A disadvantage of the corporate form of organization is

Accepted Answer

A) professional management. 
B) additional income tax. 
C) ease of transfer of ownership. 
D) unlimited life. 
A) professional management. 
B) additional income tax. 
C) ease of transfer of ownership. 
D) unlimited life.

Question 7

Common Stock Dividends Distributable is classified as a(n)

Accepted Answer

A) asset account. 
B) shareholders' equity account. 
C) expense account. 
D) liability account. 
A) asset account. 
B) shareholders' equity account. 
C) expense account. 
D) liability account.

Question 8

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 9

A debit balance in the Retained Earnings account is called a deficit.

Accepted Answer

A) True 
 B)False

Question 10

One of the reasons a company may reacquire its own shares is to reduce the market value to make the shares more affordable.

Accepted Answer

A) True 
 B)False

Question 11

Based on the following account balances, what is the total shareholders' equity?

Accepted Answer

A) $620,000 
B) $800,000 
C) $820,000 
D) $850,000 
A) $620,000 
B) $800,000 
C) $820,000 
D) $850,000

Question 12

Which one of the following would not be considered an advantage of the corporate form of organization?

Accepted Answer

A) Limited liability of shareholders 
B) Separate legal existence 
C) Continuous life 
D) Government regulation 
A) Limited liability of shareholders 
B) Separate legal existence 
C) Continuous life 
D) Government regulation

Question 13

Contributed capital is the amount shareholders paid or contributed to the corporation in exchange for shares of ownership.

Accepted Answer

A) True 
 B)False

Question 14

Use the following information for questions 
On January 1, Brunhilde Corporation had 240,000 common shares issued. On March 17, the company declared a 5% stock dividend to be distributed on March 30. The market value of the shares was $9 on March 17 and $12 on March 30.
-The entry to record the transaction of March 17 would include a

Accepted Answer

A) credit to Retained Earnings for $12,000. 
B) credit to Cash for $108,000. 
C) credit to Common Stock Dividends Distributable for $108,000. 
D) debit to Common Stock Dividends Distributable for $144,000. 
A) credit to Retained Earnings for $12,000. 
B) credit to Cash for $108,000. 
C) credit to Common Stock Dividends Distributable for $108,000. 
D) debit to Common Stock Dividends Distributable for $144,000.

Question 15

The actual cost of reacquired and retired shares is credited to the common share account.

Accepted Answer

A) True 
 B)False

Question 16

When setting the price of a new share issue, a corporation does not need to consider

Accepted Answer

A) future profit. 
B) expected dividend rate. 
C) current financial position. 
D) future trading on the secondary market. 
A) future profit. 
B) expected dividend rate. 
C) current financial position. 
D) future trading on the secondary market.

Question 17

The net effect on the corporation's books of the declaration and payment of a cash dividend are to

Accepted Answer

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

Question 18

Which of the following usually represents the largest number of common shares?

Accepted Answer

A) Restricted shares. 
B) Issued shares. 
C) Treasury shares. 
D) Authorized shares. 
A) Restricted shares. 
B) Issued shares. 
C) Treasury shares. 
D) Authorized shares.

Question 19

Which of the following factors does not affect the initial market price of a share?

Accepted Answer

A) The company's anticipated future profit 
B) The legal value of the share 
C) The current state of the economy 
D) The expected dividend rate per share 
A) The company's anticipated future profit 
B) The legal value of the share 
C) The current state of the economy 
D) The expected dividend rate per share

Question 20

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

Accepted Answer

A) True 
 B)False

The number of shares that may be issued according to the corporation's articles of incorporation is referred to as the

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

At December 31, 2012, Gem Garments Inc. has 10,000, $5, cumulative preferred shares issued. If the board of directors declares a $40,000 dividend at this date

Total comprehensive income equals profit plus other comprehensive income.

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

A disadvantage of the corporate form of organization is

Common Stock Dividends Distributable is classified as a(n)

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.

A debit balance in the Retained Earnings account is called a deficit.

One of the reasons a company may reacquire its own shares is to reduce the market value to make the shares more affordable.

Based on the following account balances, what is the total shareholders' equity?

Which one of the following would not be considered an advantage of the corporate form of organization?

Contributed capital is the amount shareholders paid or contributed to the corporation in exchange for shares of ownership.

The actual cost of reacquired and retired shares is credited to the common share account.

When setting the price of a new share issue, a corporation does not need to consider

The net effect on the corporation's books of the declaration and payment of a cash dividend are to

Which of the following usually represents the largest number of common shares?

Which of the following factors does not affect the initial market price of a share?

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

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

The number of shares that may be issued according to the corporation's articles of incorporation is referred to as the

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

At December 31, 2012, Gem Garments Inc. has 10,000, $5, cumulative preferred shares issued. If the board of directors declares a $40,000 dividend at this date

Total comprehensive income equals profit plus other comprehensive income.

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

A disadvantage of the corporate form of organization is

Common Stock Dividends Distributable is classified as a(n)

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.

A debit balance in the Retained Earnings account is called a deficit.

One of the reasons a company may reacquire its own shares is to reduce the market value to make the shares more affordable.

Based on the following account balances, what is the total shareholders' equity?

Which one of the following would not be considered an advantage of the corporate form of organization?

Contributed capital is the amount shareholders paid or contributed to the corporation in exchange for shares of ownership.

The actual cost of reacquired and retired shares is credited to the common share account.

When setting the price of a new share issue, a corporation does not need to consider

The net effect on the corporation's books of the declaration and payment of a cash dividend are to

Which of the following usually represents the largest number of common shares?

Which of the following factors does not affect the initial market price of a share?

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

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