Question 1

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 2

The board of directors must assign a per share value to a stock dividend declared that is equal to the

Accepted Answer

A) average cost. 
B) zero. 
C) original issue price. 
D) fair value. 
A) average cost. 
B) zero. 
C) original issue price. 
D) fair value.

Question 3

When stock dividends are distributed

Accepted Answer

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

Question 4

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. 
C) is closed to Retained Earnings even if it would result in a debit balance. 
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. 
C) is closed to Retained Earnings even if it would result in a debit balance. 
D) is closed to the Common Shares account.

Question 5

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 6

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 7

Legal capital

Accepted Answer

A) cannot be distributed to shareholders. 
B) reflects the most recent market price. 
C) is voted on by the shareholders. 
D) is indicative of the worth of the share. 
A) cannot be distributed to shareholders. 
B) reflects the most recent market price. 
C) is voted on by the shareholders. 
D) is indicative of the worth of the share.

Question 8

Retained earnings represents the amount of cash available for dividends.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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 11

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 12

The two most common types of dividends in practice are

Accepted Answer

A) cash and notes. 
B) cash and property. 
C) cash and stock. 
D) property and stock. 
A) cash and notes. 
B) cash and property. 
C) cash and stock. 
D) property and stock.

Question 13

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 14

Use the following information for questions 
On July 15, 2012, the board of directors of George Easton Limited declared a cash dividend of $0.50 per share on 84,000 common shares. The dividend is to be paid on August 15, 2012, to shareholders of record on July 31, 2012.
-The journal entry to be recorded on July 15, 2012, will include a

Accepted Answer

A) debit to Dividends Payable. 
B) debit to Cash Dividends. 
C) credit to Cash. 
D) credit to Retained Earnings. 
A) debit to Dividends Payable. 
B) debit to Cash Dividends. 
C) credit to Cash. 
D) credit to Retained Earnings.

Question 15

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.

Question 16

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 17

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 18

Earnings per share is calculated by dividing the profit available to common shareholders by the number of common shares issued at year end.

Accepted Answer

A) True 
 B)False

Question 19

If a corporation pays income tax on its profit, then shareholders will not have to pay income tax on any dividends received.

Accepted Answer

A) True 
 B)False

Question 20

Authorized shares of a corporation

Accepted Answer

A) reflect the initial capital needs of the company. 
B) increase shareholders' equity. 
C) are specified in its articles of incorporation. 
D) must be recorded by a formal accounting entry. 
A) reflect the initial capital needs of the company. 
B) increase shareholders' equity. 
C) are specified in its articles of incorporation. 
D) must be recorded by a formal accounting entry.

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

The board of directors must assign a per share value to a stock dividend declared that is equal to the

When stock dividends are distributed

A loss

The ability of a corporation to obtain capital is

Under the corporate form of business organization

Legal capital

Retained earnings represents the amount of cash available for dividends.

A corporation records a dividend-related liability

The main purpose of a stock split is to

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

The two most common types of dividends in practice are

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

The authorization of common shares

Dividends in arrears on cumulative preferred shares

The effect of a stock dividend is to

Earnings per share is calculated by dividing the profit available to common shareholders by the number of common shares issued at year end.

If a corporation pays income tax on its profit, then shareholders will not have to pay income tax on any dividends received.

Authorized shares of a corporation

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

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

The board of directors must assign a per share value to a stock dividend declared that is equal to the

When stock dividends are distributed

A loss

The ability of a corporation to obtain capital is

Under the corporate form of business organization

Legal capital

Retained earnings represents the amount of cash available for dividends.

A corporation records a dividend-related liability

The main purpose of a stock split is to

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

The two most common types of dividends in practice are

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

The authorization of common shares

Dividends in arrears on cumulative preferred shares

The effect of a stock dividend is to

Earnings per share is calculated by dividing the profit available to common shareholders by the number of common shares issued at year end.

If a corporation pays income tax on its profit, then shareholders will not have to pay income tax on any dividends received.

Authorized shares of a corporation

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