Question 1

Which of the following characteristics of a company limits a shareholder's loss to the amount of his or her investment in the shares of the company?

Accepted Answer

A) Separate legal entity 
B) Separation of ownership and management 
C) Transferability of ownership 
D) Limited liability 
A) Separate legal entity 
B) Separation of ownership and management 
C) Transferability of ownership 
D) Limited liability

Question 2

Which of the following describes the correct sequence of year- end closing entries?

Accepted Answer

A) Close Revenues to Income summary; close Income summary to Retained earnings; close Expenses to Retained earnings. 
B) Close Revenues to Retained earnings; close Expenses to Retained earnings; close Income summary to Retained earnings. 
C) Close Expenses to Income summary; close Revenues to Income summary; close Income summary to Retained earnings. 
D) Close Revenues to Income summary; close Expenses to Income summary; close Income summary to Retained earnings. 
A) Close Revenues to Income summary; close Income summary to Retained earnings; close Expenses to Retained earnings. 
B) Close Revenues to Retained earnings; close Expenses to Retained earnings; close Income summary to Retained earnings. 
C) Close Expenses to Income summary; close Revenues to Income summary; close Income summary to Retained earnings. 
D) Close Revenues to Income summary; close Expenses to Income summary; close Income summary to Retained earnings.

Question 3

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. What is the dividend per share for preference shares and for ordinary shares?

Accepted Answer

A) The dividend per share is $8.00 to preference shares and $0 to ordinary shares. 
B) The dividend per share is $7.50 to preference shares and $.30 to ordinary shares. 
C) The dividend per share is $.50 to preference shares and $4.60 to ordinary shares. 
D) None of the above are correct. 
A) The dividend per share is $8.00 to preference shares and $0 to ordinary shares. 
B) The dividend per share is $7.50 to preference shares and $.30 to ordinary shares. 
C) The dividend per share is $.50 to preference shares and $4.60 to ordinary shares. 
D) None of the above are correct.

Question 4

If preference shares are non- cumulative, then the company does NOT need to pay dividends that were passed in previous years.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is the amount of shareholders' equity on the company's books for each share of its capital?

Accepted Answer

A) Liquidation value 
B) Book value 
C) Amortised value 
D) Market value 
A) Liquidation value 
B) Book value 
C) Amortised value 
D) Market value

Question 6

Which of the following company characteristics is a disadvantage of the company form of business?

Accepted Answer

A) Government regulation 
B) No mutual agency 
C) Transferability of ownership 
D) Limited liability 
A) Government regulation 
B) No mutual agency 
C) Transferability of ownership 
D) Limited liability

Question 7

Which of the following describes a retained earnings deficit?

Accepted Answer

A) When the company does not pay out any dividends 
B) When the retained earnings is a negative amount 
C) When the retained earnings is less than the total share capital 
D) When the company records a loss for the year 
A) When the company does not pay out any dividends 
B) When the retained earnings is a negative amount 
C) When the retained earnings is less than the total share capital 
D) When the company records a loss for the year

Question 8

On 1 November 2013, Oster Company declared a dividend of $3.00 per share. Oster Company has 20 000 ordinary shares outstanding, and no preference shares. The date of record is 15 November, and the payment date is 30 November 2013. No journal entry is made on the date of record.

Accepted Answer

A) True 
 B)False

Question 9

No gains or losses are ever recorded by a company when they sell or issue their own shares.

Accepted Answer

A) True 
 B)False

Question 10

A company had $80 000 of Sales revenue and $75 000 of Expenses. Which of the following would be the second of three year- end closing entries?

Accepted Answer

A) Debit Income summary $75 000 and credit Expenses $75 000. 
B) Debit Expenses $75 000 and credit Income summary $75 000. 
C) Debit Revenues $80 000 and credit Income summary $80 000. 
D) Debit Income summary $5 000 and credit Retained earnings $5 000. 
A) Debit Income summary $75 000 and credit Expenses $75 000. 
B) Debit Expenses $75 000 and credit Income summary $75 000. 
C) Debit Revenues $80 000 and credit Income summary $80 000. 
D) Debit Income summary $5 000 and credit Retained earnings $5 000.

Question 11

Dallkin Corporation issued 5 000 ordinary shares at $18 per share on 1 January 2013. The journal entry for this transaction would:

Accepted Answer

A) credit Cash $90 000 and debit Ordinary shares capital $90 000. 
B) debit Cash $90 000 and credit Ordinary share capital $90 000. 
C) debit Cash $90 000 and credit Retained earnings $90 000. 
D) credit Cash $90 000, debit Retained earnings $90 000. 
A) credit Cash $90 000 and debit Ordinary shares capital $90 000. 
B) debit Cash $90 000 and credit Ordinary share capital $90 000. 
C) debit Cash $90 000 and credit Retained earnings $90 000. 
D) credit Cash $90 000, debit Retained earnings $90 000.

Question 12

Which of the following is NOT part of the role of the board of directors?

Accepted Answer

A) electing non- executive board members 
B) setting company policy 
C) electing a chairperson 
D) appointing the chief executive officer 
A) electing non- executive board members 
B) setting company policy 
C) electing a chairperson 
D) appointing the chief executive officer

Question 13

The book value of ordinary shares is equal to the total equity less the book value of preference shares, divided by the number of ordinary shares outstanding.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is TRUE of dividends in arrears?

Accepted Answer

A) Dividends in arrears are a liability on the balance sheet. 
B) Dividends in arrears are passed dividends on ordinary shares. 
C) Dividends in arrears are passed dividends on non- cumulative preference shares. 
D) Dividends in arrears are passed dividends on cumulative preference shares. 
A) Dividends in arrears are a liability on the balance sheet. 
B) Dividends in arrears are passed dividends on ordinary shares. 
C) Dividends in arrears are passed dividends on non- cumulative preference shares. 
D) Dividends in arrears are passed dividends on cumulative preference shares.

Question 15

From its inception to the year of 2014, Quicksales Company was profitable and made strong dividend payments each year. In the year 2015, Quicksales had major losses and paid no dividends. In 2016, the company started making large profits again, and they were able to pay dividends to all shareholders-both ordinary and preference. There are 1 500 shares of cumulative preference shares outstanding, paying an annual dividend of $7 each. What is the total amount of dividends which should be paid to the preference shareholders in December 2016?

Accepted Answer

A) $21 000 
B) $10 500 
C) $210 
D) $22 000 
A) $21 000 
B) $10 500 
C) $210 
D) $22 000

Which of the following characteristics of a company limits a shareholder's loss to the amount of his or her investment in the shares of the company?

Which of the following describes the correct sequence of year- end closing entries?

If preference shares are non- cumulative, then the company does NOT need to pay dividends that were passed in previous years.

Which of the following is the amount of shareholders' equity on the company's books for each share of its capital?

Which of the following company characteristics is a disadvantage of the company form of business?

Which of the following describes a retained earnings deficit?

On 1 November 2013, Oster Company declared a dividend of $3.00 per share. Oster Company has 20 000 ordinary shares outstanding, and no preference shares. The date of record is 15 November, and the payment date is 30 November 2013. No journal entry is made on the date of record.

No gains or losses are ever recorded by a company when they sell or issue their own shares.

A company had $80 000 of Sales revenue and $75 000 of Expenses. Which of the following would be the second of three year- end closing entries?

Dallkin Corporation issued 5 000 ordinary shares at $18 per share on 1 January 2013. The journal entry for this transaction would:

Which of the following is NOT part of the role of the board of directors?

The book value of ordinary shares is equal to the total equity less the book value of preference shares, divided by the number of ordinary shares outstanding.

Which of the following is TRUE of dividends in arrears?

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

Which of the following characteristics of a company limits a shareholder's loss to the amount of his or her investment in the shares of the company?

Which of the following describes the correct sequence of year- end closing entries?

If preference shares are non- cumulative, then the company does NOT need to pay dividends that were passed in previous years.

Which of the following is the amount of shareholders' equity on the company's books for each share of its capital?

Which of the following company characteristics is a disadvantage of the company form of business?

Which of the following describes a retained earnings deficit?

On 1 November 2013, Oster Company declared a dividend of $3.00 per share. Oster Company has 20 000 ordinary shares outstanding, and no preference shares. The date of record is 15 November, and the payment date is 30 November 2013. No journal entry is made on the date of record.

No gains or losses are ever recorded by a company when they sell or issue their own shares.

A company had $80 000 of Sales revenue and $75 000 of Expenses. Which of the following would be the second of three year- end closing entries?

Dallkin Corporation issued 5 000 ordinary shares at $18 per share on 1 January 2013. The journal entry for this transaction would:

Which of the following is NOT part of the role of the board of directors?

The book value of ordinary shares is equal to the total equity less the book value of preference shares, divided by the number of ordinary shares outstanding.

Which of the following is TRUE of dividends in arrears?

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