Question 1

When treasury shares are purchased for more than the par value of the shares and the cost method is used to account for treasury shares, what account(s) should be debited?

Accepted Answer

A) Treasury shares for the par value and share premium for the excess of the purchase price over the par value. 
B) share premium for the purchase price. 
C) Treasury shares for the purchase price. 
D) Treasury shares for the par value and retained earnings for the excess of the purchase price over the par value. 
A) Treasury shares for the par value and share premium for the excess of the purchase price over the par value. 
B) share premium for the purchase price. 
C) Treasury shares for the purchase price. 
D) Treasury shares for the par value and retained earnings for the excess of the purchase price over the par value.

Question 2

Shares that have a fixed per-share amount printed on each share certificate are called

Accepted Answer

A) stated value shares. 
B) fixed value shares. 
C) uniform value shares. 
D) par value shares. 
A) stated value shares. 
B) fixed value shares. 
C) uniform value shares. 
D) par value shares.

Question 3

Many companies pay dividends in amounts equal to their legally available retained earnings.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following disclosures should be made in the equity section of the statement of financial position, rather than in the notes to the financial statements?

Accepted Answer

A) Dividend preferences 
B) Liquidation preferences 
C) Call prices 
D) Conversion or exercise prices 
A) Dividend preferences 
B) Liquidation preferences 
C) Call prices 
D) Conversion or exercise prices

Question 5

A primary source of shareholders' equity is

Accepted Answer

A) income retained by the corporation. 
B) appropriated retained earnings. 
C) contributions by shareholders. 
D) both income retained by the corporation and contributions by holders. 
A) income retained by the corporation. 
B) appropriated retained earnings. 
C) contributions by shareholders. 
D) both income retained by the corporation and contributions by holders.

Question 6

When preference shares share ratably with the ordinary shareholders in any profit distributions beyond the prescribed rate this is known as the

Accepted Answer

A) Cumulative feature. 
B) Participating feature. 
C) Callable feature. 
D) Redeemable feature. 
A) Cumulative feature. 
B) Participating feature. 
C) Callable feature. 
D) Redeemable feature.

Question 7

Which of the following features of preference shares makes the security more like debt than an equity instrument?

Accepted Answer

A) Participating 
B) Voting 
C) Redeemable 
D) Noncumulative 
A) Participating 
B) Voting 
C) Redeemable 
D) Noncumulative

Question 8

The cost method records all transactions in treasury shares at their cost and reports the treasury shares as a deduction from ordinary shares.

Accepted Answer

A) True 
 B)False

Question 9

How should a "gain" from the sale of treasury shares be reflected when using the cost method of recording treasury shares transactions?

Accepted Answer

A) As other income shown on the income statement. 
B) As share premium from treasury share transactions. 
C) As an increase in the amount shown for share capital. 
D) As an increase in the retained earnings amount. 
A) As other income shown on the income statement. 
B) As share premium from treasury share transactions. 
C) As an increase in the amount shown for share capital. 
D) As an increase in the retained earnings amount.

Question 10

A corporation is incorporated in only one country regardless of the number of countries in which it operates.

Accepted Answer

A) True 
 B)False

Question 11

At the date of declaration of an ordinary share dividend, the entry should not include

Accepted Answer

A) a credit to Share Capital-Ordinary. 
B) a credit to Ordinary Share Dividend Distributable. 
C) a debit to Retained Earnings. 
D) All of these are acceptable. 
A) a credit to Share Capital-Ordinary. 
B) a credit to Ordinary Share Dividend Distributable. 
C) a debit to Retained Earnings. 
D) All of these are acceptable.

Question 12

Which of the following is a required statement under IFRS?

Accepted Answer

The answer of Which of the following is a required...

Question 13

Cumulative preference dividends in arrears should be shown in a corporation's statement of financial position as

Accepted Answer

A) an increase in current liabilities. 
B) an increase in equity. 
C) a footnote. 
D) an increase in current liabilities for the current portion and non-current liabilities for the long-term portion. 
A) an increase in current liabilities. 
B) an increase in equity. 
C) a footnote. 
D) an increase in current liabilities for the current portion and non-current liabilities for the long-term portion.

Question 14

In January 2015, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par ordinary shares for $15 per share.On July 1, 2015, Finley Corporation reacquired 1,000 shares of its outstanding shares for $12 per share.The acquisition of these treasury shares

Accepted Answer

A) decreased total shareholders' equity. 
B) increased total shareholders' equity. 
C) did not change total shareholders' equity. 
D) decreased the number of issued shares. 
A) decreased total shareholders' equity. 
B) increased total shareholders' equity. 
C) did not change total shareholders' equity. 
D) decreased the number of issued shares.

Question 15

A feature common to both share splits and share dividends is

Accepted Answer

A) a transfer to earned capital of a corporation. 
B) that there is no effect on total equity. 
C) an increase in total liabilities of a corporation. 
D) a reduction in the contributed capital of a corporation. 
A) a transfer to earned capital of a corporation. 
B) that there is no effect on total equity. 
C) an increase in total liabilities of a corporation. 
D) a reduction in the contributed capital of a corporation.

Question 16

Which of the following represents the total number of shares that a corporation may issue under the terms of its charter?

Accepted Answer

A) authorized shares 
B) issued shares 
C) unissued shares 
D) outstanding shares 
A) authorized shares 
B) issued shares 
C) unissued shares 
D) outstanding shares

Question 17

Shareholders of a business enterprise are said to be the residual owners.The term residual owner means that shareholders

Accepted Answer

A) are entitled to a dividend every year in which the business earns a profit. 
B) have the rights to specific assets of the business. 
C) bear the ultimate risks and uncertainties and receive the benefits of enterprise ownership. 
D) can negotiate individual contracts on behalf of the enterprise. 
A) are entitled to a dividend every year in which the business earns a profit. 
B) have the rights to specific assets of the business. 
C) bear the ultimate risks and uncertainties and receive the benefits of enterprise ownership. 
D) can negotiate individual contracts on behalf of the enterprise.

Question 18

If management wishes to "capitalize" part of the earnings, it may issue a

Accepted Answer

A) cash dividend. 
B) share dividend. 
C) property dividend. 
D) liquidating dividend. 
A) cash dividend. 
B) share dividend. 
C) property dividend. 
D) liquidating dividend.

Exam 15: Equity

When treasury shares are purchased for more than the par value of the shares and the cost method is used to account for treasury shares, what account(s) should be debited?

Shares that have a fixed per-share amount printed on each share certificate are called

Many companies pay dividends in amounts equal to their legally available retained earnings.

Which one of the following disclosures should be made in the equity section of the statement of financial position, rather than in the notes to the financial statements?

A primary source of shareholders' equity is

When preference shares share ratably with the ordinary shareholders in any profit distributions beyond the prescribed rate this is known as the

Which of the following features of preference shares makes the security more like debt than an equity instrument?

The cost method records all transactions in treasury shares at their cost and reports the treasury shares as a deduction from ordinary shares.

How should a "gain" from the sale of treasury shares be reflected when using the cost method of recording treasury shares transactions?

A corporation is incorporated in only one country regardless of the number of countries in which it operates.

At the date of declaration of an ordinary share dividend, the entry should not include

Which of the following is a required statement under IFRS?

Cumulative preference dividends in arrears should be shown in a corporation's statement of financial position as

In January 2015, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par ordinary shares for $15 per share.On July 1, 2015, Finley Corporation reacquired 1,000 shares of its outstanding shares for $12 per share.The acquisition of these treasury shares

A feature common to both share splits and share dividends is

Which of the following represents the total number of shares that a corporation may issue under the terms of its charter?

Shareholders of a business enterprise are said to be the residual owners.The term residual owner means that shareholders

If management wishes to "capitalize" part of the earnings, it may issue a

Financial Reporting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities, Provisions, and Contingencies

Non-Current Liabilities

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Presentation and Disclosure in Financialreporting

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