Exam 11: Shareholders Equity

Accounting for cash dividends involves four important dates. Some of these dates have accounting significance and some do not. Instructions Identify and briefly discuss each of the four dates connected with accounting for dividends and indicate which require a journal entry.

On December 1, Murial Ltd. declared a 2 for 1 stock split when the market value was $40 per share. Prior to the split, there were 200,000 shares issued and outstanding. After the stock split, the number of shares outstanding and the share capital balance were Shares Capital

Stable companies usually pay out a lower portion of their earnings in dividends.

Retractable shares can be sold back to the company at the option of the shareholder.

In a situation where a CDN company has a dual class share structure and common shareholders have more than one vote, this is referred to as a

Which of the following is not a basic right of common shares?

A 2-for-1 stock split should have the effect of cutting the market price per share in half.

Which of the following statements is true?

Stock splits only apply to common shareholders.

The pre-emptive right is the right to

Convertible preferred shares can be converted, at the option of the company, into other types of preferred shares.

Public companies cannot pay a dividend on the date of declaration.

Which date is used to determine which shareholders will receive the declared dividend?

The first step in calculating the price/earnings ratio is

Reverse stock splits are used by companies whose low share price

Repurchasing shares

Partridge Ltd.'s shares were issued for $21.00 but now have a market value of $35.00. The most recent EPS for the company was $3.00. The P/E ratio for Partridge Ltd. is

The repurchase of shares at a price lower than what the shares were initially issued at is called

Earnings per share provides a measure of the earnings relative to the number of common shares outstanding.

All companies are obligated to declare dividends.