Question 1

Share capital consists of:

Accepted Answer

A) amounts received from shareholders. 
B) capital raised by issuing debentures. 
C) amounts paid by customers. 
D) earnings generated by the company. 
A) amounts received from shareholders. 
B) capital raised by issuing debentures. 
C) amounts paid by customers. 
D) earnings generated by the company.

Question 2

Which of the following describes retained earnings?

Accepted Answer

A) Externally generated capital that is raised from banks and other creditors 
B) Internally generated capital that results from employees' contributions 
C) Internally generated capital that results from profitable business transactions 
D) Externally generated capital that is contributed by shareholders 
A) Externally generated capital that is raised from banks and other creditors 
B) Internally generated capital that results from employees' contributions 
C) Internally generated capital that results from profitable business transactions 
D) Externally generated capital that is contributed by shareholders

Question 3

If a company has a strong rate of return on total assets, that shows that they can easily pay off their current liabilities with their current assets.

Accepted Answer

A) True 
 B)False

Question 4

A dividend's declaration date is the date the board of directors announces the intention to pay the dividend.

Accepted Answer

A) True 
 B)False

Question 5

A company's income tax expense is calculated on the basis of book profit, but the income tax payable amount is based on the:

Accepted Answer

A) amount of payroll tax that has not been paid yet. 
B) amount of taxable income, as calculated on the income tax return. 
C) GST rate applied to sales revenues. 
D) amount of dividends paid to shareholders. 
A) amount of payroll tax that has not been paid yet. 
B) amount of taxable income, as calculated on the income tax return. 
C) GST rate applied to sales revenues. 
D) amount of dividends paid to shareholders.

Question 6

Which of the following is a TRUE statement about a company?

Accepted Answer

A) The owners of a company have co- ownership of the property of the company. 
B) A company has a limited life. 
C) A company is not taxed on the company's business income. 
D) The owners of a company have limited liability for the company's debts. 
A) The owners of a company have co- ownership of the property of the company. 
B) A company has a limited life. 
C) A company is not taxed on the company's business income. 
D) The owners of a company have limited liability for the company's debts.

Question 7

All companies must issue both ordinary and preference shares.

Accepted Answer

A) True 
 B)False

Question 8

Orleans Company was incorporated on 1 January 2013. Orleans issued 4 000 ordinary shares and 500 preference shares on that date. The preference shares pay annual dividends of $8 each. Orleans has not paid any dividends yet. In 2016, Orleans had its first profitable year, and on 1 November 2016, Orleans declared a total dividend of $28 000. What is the total amount that will be paid out to ordinary shareholders?

Accepted Answer

A) $16 000 
B) $28 000 
C) $12 000 
D) $4 000 
A) $16 000 
B) $28 000 
C) $12 000 
D) $4 000

Question 9

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

Accepted Answer

A) Credit Retained earnings $5 000. 
B) Credit Income summary $125 000. 
C) Debit Income summary $5 000. 
D) Debit Retained earnings $5 000. 
A) Credit Retained earnings $5 000. 
B) Credit Income summary $125 000. 
C) Debit Income summary $5 000. 
D) Debit Retained earnings $5 000.

Question 10

Deferred tax would normally arise from which of the following situations?

Accepted Answer

A) When a company makes a different choice for its tax return versus its book net profit 
B) When a company withholds income tax from its employees' payroll 
C) When a company pays off all of its debts at the end of the year 
D) When a company pays income tax quarterly versus yearly 
A) When a company makes a different choice for its tax return versus its book net profit 
B) When a company withholds income tax from its employees' payroll 
C) When a company pays off all of its debts at the end of the year 
D) When a company pays income tax quarterly versus yearly

Question 11

Which of the following is TRUE of dividends?

Accepted Answer

A) Dividends decrease share capital. 
B) Dividends increase shareholders' equity. 
C) Dividends are a distribution of cash or other assets to the shareholders. 
D) Dividends increase assets and decrease total shareholders' equity of a company. 
A) Dividends decrease share capital. 
B) Dividends increase shareholders' equity. 
C) Dividends are a distribution of cash or other assets to the shareholders. 
D) Dividends increase assets and decrease total shareholders' equity of a company.

Question 12

Amethyst Company's income statement shows net profit before income tax of $56 000. The company's tax return shows taxable income of $64 000. Company's tax rate is 30%. Which of the following entries would be used to record tax expense and tax payable?

Accepted Answer

A) Debit Income tax expense $19 200 and credit Cash $19 200. 
B) Debit Income tax expense $16 800, debit Future income tax benefit $2 400 and credit Income tax payable $19 200 
C) Debit Deferred tax liability $2 400, debit Future income tax benefit $16 800 and credit Income tax payable $19 200. 
D) Debit Income tax expense $19 200, credit Deferred tax liability $2 400 and credit Income tax payable $16 800. 
A) Debit Income tax expense $19 200 and credit Cash $19 200. 
B) Debit Income tax expense $16 800, debit Future income tax benefit $2 400 and credit Income tax payable $19 200 
C) Debit Deferred tax liability $2 400, debit Future income tax benefit $16 800 and credit Income tax payable $19 200. 
D) Debit Income tax expense $19 200, credit Deferred tax liability $2 400 and credit Income tax payable $16 800.

Question 13

A company is a separate legal entity formed under the Companies Act.

Accepted Answer

A) True 
 B)False

Question 14

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 market value of $15 per share. Osbourne should record a gain on the sale of shares for the difference between the equipment's market value and the share's current market value.

Accepted Answer

A) True 
 B)False

Question 15

When a company records the year- end closing entries, the first step is to close the Revenues to Retained earnings.

Accepted Answer

A) True 
 B)False

Question 16

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 total amount of dividends that will be paid to the ordinary shareholders?

Accepted Answer

A) $32 000 
B) $4 500 
C) $400 
D) $40 000 
A) $32 000 
B) $4 500 
C) $400 
D) $40 000

Question 17

Which of the following statements describes the company characteristic termed double taxation?

Accepted Answer

A) Companies pay income tax on company earnings, and shareholders pay personal income tax on company dividends and gains from sale of shares. 
B) The liabilities of the company cannot be extended to the personal assets of the shareholder. 
C) Company shares can be readily bought and sold by investors on the open market. 
D) Shareholders are not authorised to sign contracts or make business commitments on behalf of the company. 
A) Companies pay income tax on company earnings, and shareholders pay personal income tax on company dividends and gains from sale of shares. 
B) The liabilities of the company cannot be extended to the personal assets of the shareholder. 
C) Company shares can be readily bought and sold by investors on the open market. 
D) Shareholders are not authorised to sign contracts or make business commitments on behalf of the company.

Question 18

Which of the following statements describes the company characteristic of transferability of company ownership?

Accepted Answer

A) The liabilities of the company cannot be extended to the personal assets of the shareholder. 
B) Shares can be readily bought and sold by investors on the open market. 
C) Companies pay income tax on company earnings, and shareholders pay personal income tax on company dividends and gains from sale of shares. 
D) Shareholders are not authorised to sign contracts or make business commitments on behalf of the company. 
A) The liabilities of the company cannot be extended to the personal assets of the shareholder. 
B) Shares can be readily bought and sold by investors on the open market. 
C) Companies pay income tax on company earnings, and shareholders pay personal income tax on company dividends and gains from sale of shares. 
D) Shareholders are not authorised to sign contracts or make business commitments on behalf of the company.

Question 19

Which of the following occurs when a previously declared dividend is paid?

Accepted Answer

A) Equity increases 
B) Liabilities increase 
C) Liabilities decrease 
D) Assets increase 
A) Equity increases 
B) Liabilities increase 
C) Liabilities decrease 
D) Assets increase

Question 20

The shares of publicly owned companies are bought and sold on stock exchanges, such as the Australian Securities Exchange.

Accepted Answer

A) True 
 B)False

Share capital consists of:

Which of the following describes retained earnings?

If a company has a strong rate of return on total assets, that shows that they can easily pay off their current liabilities with their current assets.

A dividend's declaration date is the date the board of directors announces the intention to pay the dividend.

A company's income tax expense is calculated on the basis of book profit, but the income tax payable amount is based on the:

Which of the following is a TRUE statement about a company?

All companies must issue both ordinary and preference shares.

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

Deferred tax would normally arise from which of the following situations?

Which of the following is TRUE of dividends?

Amethyst Company's income statement shows net profit before income tax of $56 000. The company's tax return shows taxable income of $64 000. Company's tax rate is 30%. Which of the following entries would be used to record tax expense and tax payable?

A company is a separate legal entity formed under the Companies Act.

When a company records the year- end closing entries, the first step is to close the Revenues to Retained earnings.

Which of the following statements describes the company characteristic termed double taxation?

Which of the following statements describes the company characteristic of transferability of company ownership?

Which of the following occurs when a previously declared dividend is paid?

The shares of publicly owned companies are bought and sold on stock exchanges, such as the Australian Securities Exchange.

The Role of Accounting in Business

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Share Capital and the Balance Sheet

Companies: Effects on Retained Earnings, Share Splits and Buy-Backs, and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Introduction to Managerial Accounting and the Master Budget

Job Costing

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

Filters

Exam 24: Appendix

Share capital consists of:

Which of the following describes retained earnings?

If a company has a strong rate of return on total assets, that shows that they can easily pay off their current liabilities with their current assets.

A dividend's declaration date is the date the board of directors announces the intention to pay the dividend.

A company's income tax expense is calculated on the basis of book profit, but the income tax payable amount is based on the:

Which of the following is a TRUE statement about a company?

All companies must issue both ordinary and preference shares.

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

Deferred tax would normally arise from which of the following situations?

Which of the following is TRUE of dividends?

Amethyst Company's income statement shows net profit before income tax of $56 000. The company's tax return shows taxable income of $64 000. Company's tax rate is 30%. Which of the following entries would be used to record tax expense and tax payable?

A company is a separate legal entity formed under the Companies Act.

When a company records the year- end closing entries, the first step is to close the Revenues to Retained earnings.

Which of the following statements describes the company characteristic termed double taxation?

Which of the following statements describes the company characteristic of transferability of company ownership?

Which of the following occurs when a previously declared dividend is paid?

The shares of publicly owned companies are bought and sold on stock exchanges, such as the Australian Securities Exchange.

The Role of Accounting in Business

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Share Capital and the Balance Sheet

Companies: Effects on Retained Earnings, Share Splits and Buy-Backs, and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Introduction to Managerial Accounting and the Master Budget

Job Costing

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

Filters