Exam 24: Appendix

Peterson Company is issuing 4 000 ordinary shares, payable by instalments. Investors must pay $10 per share on application, $5 per share on allotment, and there will be a final call of $2 payable at a later date to be determined by directors. The journal entry to record the final call by directors will include:

Deferred tax can either be an asset or a liability.

Which of the following types of shares are considered to be LEAST risky for investors?

On 1 November 2014, Oster Company declared a dividend of $3.00 per share. Oster Company has 20 000 ordinary shares outstanding and no preference shares. Which of the following is the journal entry needed to record the declaration of dividends?

Osbourne Company issued 50 000 shares of ordinary shares in exchange for manufacturing equipment. The equipment was valued at $1 000 000. The shares have a value of $18 per share. The entry to record this transaction would include which of the following line items?

Onyx Company's income statement shows net profit before income tax of $38 000. The company's tax return shows taxable income of $34 000. Company's tax rate is 30%. Which of the following entries would be used to record tax expense and tax payable?

Which of the following shows the relationship between net profit available to ordinary shareholders and average ordinary equity?

Retained earnings represents:

Which of the following occurs when a shareholder invests cash in a company in exchange for shares?

Which of the following is an advantage of preference shares?

Normally, a company's book profit and taxable income should be the same.

On 1 November 2014, Oster Company declared a dividend of $3.00 per share. Oster Company has 20 000 shares of ordinary shares outstanding and no preference shares. The date of record is 15 November, and the payment date is 30 November 2014. Which of the following is the journal entry needed on 30 November?

Occidental Produce Company has 40 000 shares of ordinary shares outstanding and 2 000 shares of preference shares outstanding. The preference shares pay annual dividends of $4 each. On 15 October 2014, the company declares a total dividend payment of $40 000. What is the amount of dividend which will be paid for each share of ordinary shares?

Which of the following is an advantage of preference shares?

A company has 15 000 cumulative preference shares outstanding and 25 000 shares of ordinary shares outstanding. The preference shares pay an annual dividend of $5 each. Dividends of $37 500 are in arrears. At the end of the current year, the company declares a dividend of $120 000. How is the dividend allocated between preference and ordinary shareholders?

Hot Tamale Company had $120 000 of revenues and $125 000 of expenses. No dividends were paid. The second of the year- end closing entries should include which of the following line items?

A disadvantage of the company is the separation between the owners of the company (the shareholders)and the managers of the company, which can sometimes result in a conflict of interests.

Hot Tamale Company had $120 000 of revenues and $113 000 of expenses. No dividends were paid. These factors will result in which of the following?

Which of the following statements describes the company characteristic termed limited liability?

Companies must issue ordinary shares, but may or may not decide to issue preference shares.