Question 1

When the disposal of a significant business component occurs, the income statement should report the profit (or loss) from this event as

Accepted Answer

A)  other revenue or expense. 
B)  cost of goods sold. 
C)  discontinued operations, before tax. 
D)  discontinued operations, net of tax. 
A)  other revenue or expense. 
B)  cost of goods sold. 
C)  discontinued operations, before tax. 
D)  discontinued operations, net of tax.

Question 2

All of the following should occur as a result of a prior period adjustment EXCEPT

Accepted Answer

A)  the cumulative effect of the correction or change should be reported as an adjustment to opening retained earnings. 
B)  all prior period financial statements should be corrected or restated. 
C)  the effects of the change should be detailed and disclosed in a note to the financial statements. 
D)  the unadjusted balance of retained earnings should be presented on the balance sheet. 
A)  the cumulative effect of the correction or change should be reported as an adjustment to opening retained earnings. 
B)  all prior period financial statements should be corrected or restated. 
C)  the effects of the change should be detailed and disclosed in a note to the financial statements. 
D)  the unadjusted balance of retained earnings should be presented on the balance sheet.

Question 3

To calculate earnings per share, preferred dividends declared

Accepted Answer

A)  should be subtracted from profit. 
B)  should be added to profit. 
C)  have no impact on the earnings per share calculation. 
D)  must be added to the number of common shares issued. 
A)  should be subtracted from profit. 
B)  should be added to profit. 
C)  have no impact on the earnings per share calculation. 
D)  must be added to the number of common shares issued.

Question 4

Jacobs Corporation has the following shareholders' equity on December 31, 2014:
Shareholders' equity  
-If 10,000 common shares were reacquired for $24 per share, the journal entry to record the transaction would

Accepted Answer

A)  credit Contributed Surplus-Reacquisition of Shares for $40,000. 
B)  credit Retained Earnings for $40,000. 
C)  credit Common Shares for $240,000. 
D)  debit Common Shares for $200,000. 
A)  credit Contributed Surplus-Reacquisition of Shares for $40,000. 
B)  credit Retained Earnings for $40,000. 
C)  credit Common Shares for $240,000. 
D)  debit Common Shares for $200,000.

Question 5

When a change in accounting policy occurs,

Accepted Answer

A)  nothing should be done. 
B)  the new policy should be used in reporting the results of operations of the current year, and the cumulative income effect net of tax should be reflected on the statement of retained earnings as an adjustment to the opening balance. 
C)  the cumulative effect of the change in policy should be reflected on the income statement as of the beginning of the next year. 
D)  the cumulative effect of the change in accounting policy should be classified as an extraordinary item on the income statement. 
A)  nothing should be done. 
B)  the new policy should be used in reporting the results of operations of the current year, and the cumulative income effect net of tax should be reflected on the statement of retained earnings as an adjustment to the opening balance. 
C)  the cumulative effect of the change in policy should be reflected on the income statement as of the beginning of the next year. 
D)  the cumulative effect of the change in accounting policy should be classified as an extraordinary item on the income statement.

Question 6

Irwin, Inc. had 200,000 common shares before a stock split occurred and 400,000 shares after the stock split. The stock split was

Accepted Answer

A)  2 for 4. 
B)  4 for 1. 
C)  1 for 4. 
D)  2 for 1. 
A)  2 for 4. 
B)  4 for 1. 
C)  1 for 4. 
D)  2 for 1.

Question 7

During its first year of operations, Millwoods Enterprises Inc. had the following transactions related to its common shares:
Jan 5 Issued 5,000 common shares to Michelle Vogel for $1 each.
Mar 15 Issued 10,000 common shares in exchange for equipment transferred from Vogel. The equipment was valued at $40,000.
Apr 10 Issued 3,500 shares to a consulting firm for management consulting services as settlement of a $14,000 invoice.
Sep 30 Issued 4,000 common shares to Renee Vogel for $5 each.
Instructions
a. Journalize the share transactions.
b. Calculate the average cost of the common shares of Millwoods Enterprises Inc. at December 31, 2014.

Accepted Answer

The answer of During its first year of operations, Millwoods...

Question 8

Which of the following show the proper effect of a stock split and a stock dividend?

Accepted Answer

The answer of Which of the following show the proper...

Question 9

Earnings per share is normally only reported using

Accepted Answer

A)  Preferred Shares. 
B)  Retained Earnings. 
C)  Common Shares. 
D)  Dividends Payable. 
A)  Preferred Shares. 
B)  Retained Earnings. 
C)  Common Shares. 
D)  Dividends Payable.

Question 10

The general concept of "let the tax follow the profit or loss" is associated with

Accepted Answer

A)  Revenue recognition criteria. 
B)  Intraperiod tax allocation. 
C)  Canada Pension Plan. 
D)  taxation of partnership income. 
A)  Revenue recognition criteria. 
B)  Intraperiod tax allocation. 
C)  Canada Pension Plan. 
D)  taxation of partnership income.

Question 11

A correction of a prior period error would lead to restatement of the opening balance of retained earnings.

Accepted Answer

A) True 
 B)False

Question 12

At January 1, 2013, Karpo Corporation had the following share capital:   On July 1, 2013, the board of directors declared and paid a 10% common stock dividend. On October 1, 2013, the company sold an additional 20,000 common shares for proceeds of $280,000. The corporation earned $150,000 during the year and declared $30,000 in dividends to preferred shareholders.
-Assuming no dividends were paid in 2013, earnings per share for 2013 would be

Accepted Answer

A)  $7.74. 
B)  $8.39. 
C)  $5.00. 
D)  $9.68. 
A)  $7.74. 
B)  $8.39. 
C)  $5.00. 
D)  $9.68.

Question 13

On January 1, 2014, Grieve Grocers Inc.'s retained earnings account had a deficit (negative) balance of $75,000. During the year ended December 31, 2014, the company's second year of operations, Grieve had the following events which occurred in the sequence listed:
1. Declared and distributed a 10% stock dividend on common shares. Prior to the dividend, Grieve had 60,000 common shares issued with a total cost of $160,000, and the market value of the shares was $6.50 each.
2. Approved at two-for-one stock split.
3. Declared a cash dividend in the amount of $1 per share which is payable 15 days after the company's year end.
4. Profit for the year before taxes was $712,000.
5. Corrected the calculation of the prior year's cost of goods sold, which had been reported as $875,000 but which should have been $900,000, and adjusted the resulting tax savings.
6. Incurred an Other Comprehensive Loss of $174,500 (before income taxes).
Instructions
Prepare Grieve's statement of changes in shareholders' equity for the year ended December 31, 2014 assuming that Grieve has an income tax rate of 25%.

Accepted Answer

@#IMG-DLM& Note X: A 2-for-1 stock split

Question 14

A stock split

Accepted Answer

A)  may occur in the absence of retained earnings. 
B)  will increase total contributed capital. 
C)  will increase the total value of the shares. 
D)  will have no effect on the value per share. 
A)  may occur in the absence of retained earnings. 
B)  will increase total contributed capital. 
C)  will increase the total value of the shares. 
D)  will have no effect on the value per share.

Question 15

The following information is available from the accounting records of DeWitt Engineering Ltd. for the year ended June 30, 2014:   Instructions
Prepare a combined Statement of Income and Comprehensive Income for the year ended June 30, 2014. The company has a 30% income tax rate and records gains and losses on equity investments as other comprehensive income.

Accepted Answer

The answer of The following information is available from the...

Question 16

Price Earnings ratio is calculated as the EPS divided by the market price per share.

Accepted Answer

A) True 
 B)False

Question 17

All of the following are included in comprehensive income EXCEPT

Accepted Answer

A)  profit reported on the traditional income statement. 
B)  income tax expense. 
C)  dividends paid. 
D)  gains and losses on equity investments. 
A)  profit reported on the traditional income statement. 
B)  income tax expense. 
C)  dividends paid. 
D)  gains and losses on equity investments.

Question 18

The ratio that indicates the percentage of earnings the company is distributing to shareholders is the

Accepted Answer

A)  price-earnings ratio. 
B)  earnings per share. 
C)  debt to total assets. 
D)  payout ratio. 
A)  price-earnings ratio. 
B)  earnings per share. 
C)  debt to total assets. 
D)  payout ratio.

Question 19

Prior period adjustments should be made for a change in accounting policy by the company.

Accepted Answer

A) True 
 B)False

Question 20

RD Holdings Ltd. which has authorized share capital of an unlimited number of common shares, and no other authorized classes of shares, had the following share transactions during 2014, its first year of operations:
Jan 2 Issued 30,000 common shares at $0.10 each.
Jan 15 Issued 50,000 common shares to Roy Daines in exchange for management services valued at $5,000.
Jan 31 Issued 1,000,000 common shares to Rachel Daines in exchange for merchandise inventory valued at $15,000, land valued at $30,000 and a building valued at $55,000.
Mar 31 Issued 60,000 to Gilmore Law Firm in exchange for legal services. It is assumed that the market price of RD Holding's shares is unchanged since January 2.
Dec 1 Reacquired the shares held by Gilmore Law Firm for $0.25 per share.
Instructions
Record the 2014 share transactions.

Accepted Answer

The answer of RD Holdings Ltd. which has authorized share...

When the disposal of a significant business component occurs, the income statement should report the profit (or loss) from this event as

All of the following should occur as a result of a prior period adjustment EXCEPT

To calculate earnings per share, preferred dividends declared

Jacobs Corporation has the following shareholders' equity on December 31, 2014: Shareholders' equity -If 10,000 common shares were reacquired for $24 per share, the journal entry to record the transaction would

When a change in accounting policy occurs,

Irwin, Inc. had 200,000 common shares before a stock split occurred and 400,000 shares after the stock split. The stock split was

Which of the following show the proper effect of a stock split and a stock dividend?

Earnings per share is normally only reported using

The general concept of "let the tax follow the profit or loss" is associated with

A correction of a prior period error would lead to restatement of the opening balance of retained earnings.

A stock split

Price Earnings ratio is calculated as the EPS divided by the market price per share.

All of the following are included in comprehensive income EXCEPT

The ratio that indicates the percentage of earnings the company is distributing to shareholders is the

Prior period adjustments should be made for a change in accounting policy by the company.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 14: Corporations: Additional Topics and Ifrs

When the disposal of a significant business component occurs, the income statement should report the profit (or loss) from this event as

All of the following should occur as a result of a prior period adjustment EXCEPT

To calculate earnings per share, preferred dividends declared

Jacobs Corporation has the following shareholders' equity on December 31, 2014: Shareholders' equity -If 10,000 common shares were reacquired for $24 per share, the journal entry to record the transaction would

When a change in accounting policy occurs,

Irwin, Inc. had 200,000 common shares before a stock split occurred and 400,000 shares after the stock split. The stock split was

Which of the following show the proper effect of a stock split and a stock dividend?

Earnings per share is normally only reported using

The general concept of "let the tax follow the profit or loss" is associated with

A correction of a prior period error would lead to restatement of the opening balance of retained earnings.

A stock split

Price Earnings ratio is calculated as the EPS divided by the market price per share.

All of the following are included in comprehensive income EXCEPT

The ratio that indicates the percentage of earnings the company is distributing to shareholders is the

Prior period adjustments should be made for a change in accounting policy by the company.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters