Question 1

Which of the following right of an ordinary shareholder is being eliminated by many companies?

Accepted Answer

A) right to vote and elect the board of directors. 
B) right to receive a pro rata share of dividends paid. 
C) pre-emptive right. 
D) share in assets at liquidation. 
A) right to vote and elect the board of directors. 
B) right to receive a pro rata share of dividends paid. 
C) pre-emptive right. 
D) share in assets at liquidation.

Question 2

A corporate board of directors does not generally

Accepted Answer

A) select officers. 
B) formulate operating policies. 
C) declare dividends. 
D) execute policy. 
A) select officers. 
B) formulate operating policies. 
C) declare dividends. 
D) execute policy.

Question 3

Ordinary Share Dividends Distributable is classified as a(n)

Accepted Answer

A) asset account. 
B) equity account. 
C) expense account. 
D) liability account. 
A) asset account. 
B) equity account. 
C) expense account. 
D) liability account.

Question 4

Which of the following is not true of a corporation?

Accepted Answer

A) It may buy, own, and sell property. 
B) It may sue and be sued. 
C) The acts of its owners bind the corporation. 
D) It may enter into binding legal contracts in its own name. 
A) It may buy, own, and sell property. 
B) It may sue and be sued. 
C) The acts of its owners bind the corporation. 
D) It may enter into binding legal contracts in its own name.

Question 5

Prior period adjustments to income are reported in the current year's income statement.

Accepted Answer

A) True 
 B)False

Question 6

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

Accepted Answer

A) decrease total liabilities and equity. 
B) increase total expenses and total liabilities. 
C) increase total assets and equity. 
D) decrease total assets and equity. 
A) decrease total liabilities and equity. 
B) increase total expenses and total liabilities. 
C) increase total assets and equity. 
D) decrease total assets and equity.

Question 7

Kim, Inc.issued 8,000 ordinary shares with a stated value of ¥100/share.The total issue of shares sold for ¥150 per share.The journal entry to record this transaction would include a

Accepted Answer

A) debit to Cash for ¥800,000. 
B) credit to Share Capital-Ordinary for ¥800,000. 
C) debit to Share Premium-Ordinary for ¥400,000. 
D) credit to Share Capital-Ordinary for ¥1,200,000. 
A) debit to Cash for ¥800,000. 
B) credit to Share Capital-Ordinary for ¥800,000. 
C) debit to Share Premium-Ordinary for ¥400,000. 
D) credit to Share Capital-Ordinary for ¥1,200,000.

Question 8

The declaration and distribution of a share dividend will

Accepted Answer

A) increase total equity. 
B) increase total assets. 
C) decrease total assets. 
D) have no effect on total assets. 
A) increase total equity. 
B) increase total assets. 
C) decrease total assets. 
D) have no effect on total assets.

Question 9

A detailed equity section in the statement of financial position will list the names of individuals who are eligible to receive dividends on the date of record.

Accepted Answer

A) True 
 B)False

Question 10

Allstate, Inc., has 10,000 shares of 6%, $100 par value, noncumulative preference shares and 100,000 ordinary shares with a $1 par value outstanding at December 31, 2011.If the board of directors declares a $200,000 dividend, the

Accepted Answer

A) preference shareholders will receive 1/10th of what the ordinary shareholders will receive. 
B) preference shareholders will receive the entire $200,000. 
C) $60,000 will be held as restricted retained earnings and paid out at some future date. 
D) preference shareholders will receive $60,000 and the ordinary shareholders will receive $140,000. 
A) preference shareholders will receive 1/10th of what the ordinary shareholders will receive. 
B) preference shareholders will receive the entire $200,000. 
C) $60,000 will be held as restricted retained earnings and paid out at some future date. 
D) preference shareholders will receive $60,000 and the ordinary shareholders will receive $140,000.

Question 11

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

Accepted Answer

A) corporation is organized for the purpose of making a profit. 
B) corporation is subject to government taxes. 
C) corporation is an accounting economic entity. 
D) corporation's temporary accounts are closed at the end of the accounting period. 
A) corporation is organized for the purpose of making a profit. 
B) corporation is subject to government taxes. 
C) corporation is an accounting economic entity. 
D) corporation's temporary accounts are closed at the end of the accounting period.

Question 12

Agler, Inc.has 10,000 shares of 7%, $100 par value, cumulative preference shares and 100,000 ordinary shares with a $1 par value outstanding at December 31, 2011.If the board of directors declares a $60,000 dividend, the

Accepted Answer

A) preference shareholders will receive 1/10th of what the ordinary shareholders will receive. 
B) preference shareholders will receive the entire $60,000. 
C) $60,000 will be held as restricted retained earnings and paid out at some future date. 
D) preference shareholders will receive $30,000 and the ordinary shareholders will receive $30,000. 
A) preference shareholders will receive 1/10th of what the ordinary shareholders will receive. 
B) preference shareholders will receive the entire $60,000. 
C) $60,000 will be held as restricted retained earnings and paid out at some future date. 
D) preference shareholders will receive $30,000 and the ordinary shareholders will receive $30,000.

Question 13

Retained earnings represents the amount of cash available for dividends.

Accepted Answer

A) True 
 B)False

Question 14

A company would not acquire treasury shares

Accepted Answer

A) in order to reissue shares to officers. 
B) as an asset investment. 
C) in order to increase trading of the company's shares. 
D) to have additional shares available to use in acquisitions of other companies. 
A) in order to reissue shares to officers. 
B) as an asset investment. 
C) in order to increase trading of the company's shares. 
D) to have additional shares available to use in acquisitions of other companies.

Question 15

Which one of the following is not necessary in order for a corporation to pay a cash dividend?

Accepted Answer

A) Adequate cash 
B) Approval of shareholders 
C) Declaration of dividends by the board of directors 
D) Retained earnings 
A) Adequate cash 
B) Approval of shareholders 
C) Declaration of dividends by the board of directors 
D) Retained earnings

Question 16

Ed Tresh has invested $400,000 in a privately held family corporation.The corporation does not do well and must declare bankruptcy.What amount does Tresh stand to lose?

Accepted Answer

A) Up to his total investment of $400,000. 
B) Zero. 
C) The $400,000 plus any personal assets the creditors demand. 
D) $200,000. 
A) Up to his total investment of $400,000. 
B) Zero. 
C) The $400,000 plus any personal assets the creditors demand. 
D) $200,000.

Question 17

Kerwin Packaging Corporation began business in 2010 by issuing 30,000 ordinary shares with a $5 par for $8 per share and 10,000 preference shares of 6%, $10 par at par.At year end, the common share had a market value of $10.On its December 31, 2011, statement of financial position, Kerwin Packaging would report

Accepted Answer

A) Share Capital-Ordinary of $300,000. 
B) Share Capital-Ordinary of $150,000. 
C) Share Capital-Ordinary of $240,000. 
D) Share Premium-Ordinary of $150,000. 
A) Share Capital-Ordinary of $300,000. 
B) Share Capital-Ordinary of $150,000. 
C) Share Capital-Ordinary of $240,000. 
D) Share Premium-Ordinary of $150,000.

Question 18

Ordinary Share Dividends Distributable is shown in the equity section of the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 19

The following data is available for BOX Corporation at December 31,2011 :
Ordinary shares, par $ € 10 $ (authorized 15,000 shares\} $ \in 100,000 $
Treasury Shares (at cost $ € 15 $ per share)
600
Based on the data, how many ordinary shares are outstanding?

Accepted Answer

A)  15,000 
B)  10,000 
C)  14,960 
D)  9,960 
A)  15,000 
B)  10,000 
C)  14,960 
D)  9,960

Question 20

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

Accepted Answer

A) True 
 B)False

Which of the following right of an ordinary shareholder is being eliminated by many companies?

A corporate board of directors does not generally

Ordinary Share Dividends Distributable is classified as a(n)

Which of the following is not true of a corporation?

Prior period adjustments to income are reported in the current year's income statement.

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

Kim, Inc.issued 8,000 ordinary shares with a stated value of ¥100/share.The total issue of shares sold for ¥150 per share.The journal entry to record this transaction would include a

The declaration and distribution of a share dividend will

A detailed equity section in the statement of financial position will list the names of individuals who are eligible to receive dividends on the date of record.

Allstate, Inc., has 10,000 shares of 6%, $100 par value, noncumulative preference shares and 100,000 ordinary shares with a $1 par value outstanding at December 31, 2011.If the board of directors declares a $200,000 dividend, the

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

Agler, Inc.has 10,000 shares of 7%, $100 par value, cumulative preference shares and 100,000 ordinary shares with a $1 par value outstanding at December 31, 2011.If the board of directors declares a $60,000 dividend, the

Retained earnings represents the amount of cash available for dividends.

A company would not acquire treasury shares

Which one of the following is not necessary in order for a corporation to pay a cash dividend?

Ed Tresh has invested $400,000 in a privately held family corporation.The corporation does not do well and must declare bankruptcy.What amount does Tresh stand to lose?

Ordinary Share Dividends Distributable is shown in the equity section of the statement of financial position.

The following data is available for BOX Corporation at December 31,2011 : Ordinary shares, par $€ 10$ (authorized 15,000 shares\} $\in 100,000$ Treasury Shares (at cost $€ 15$ per share) 600 Based on the data, how many ordinary shares are outstanding?

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Payroll Accounting

Other Significant Liabilities

Filters

Exam 11: Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Which of the following right of an ordinary shareholder is being eliminated by many companies?

A corporate board of directors does not generally

Ordinary Share Dividends Distributable is classified as a(n)

Which of the following is not true of a corporation?

Prior period adjustments to income are reported in the current year's income statement.

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

Kim, Inc.issued 8,000 ordinary shares with a stated value of ¥100/share.The total issue of shares sold for ¥150 per share.The journal entry to record this transaction would include a

The declaration and distribution of a share dividend will

A detailed equity section in the statement of financial position will list the names of individuals who are eligible to receive dividends on the date of record.

Allstate, Inc., has 10,000 shares of 6%, $100 par value, noncumulative preference shares and 100,000 ordinary shares with a $1 par value outstanding at December 31, 2011.If the board of directors declares a $200,000 dividend, the

A factor which distinguishes the corporate form of organization from a sole proprietorship or partnership is that a

Agler, Inc.has 10,000 shares of 7%, $100 par value, cumulative preference shares and 100,000 ordinary shares with a $1 par value outstanding at December 31, 2011.If the board of directors declares a $60,000 dividend, the

Retained earnings represents the amount of cash available for dividends.

A company would not acquire treasury shares

Which one of the following is not necessary in order for a corporation to pay a cash dividend?

Ed Tresh has invested $400,000 in a privately held family corporation.The corporation does not do well and must declare bankruptcy.What amount does Tresh stand to lose?

Ordinary Share Dividends Distributable is shown in the equity section of the statement of financial position.

The following data is available for BOX Corporation at December 31,2011 : Ordinary shares, par €10 € 10 €10 (authorized 15,000 shares\} ∈100,000 \in 100,000 ∈100,000 Treasury Shares (at cost €15 € 15 €15 per share) 600 Based on the data, how many ordinary shares are outstanding?

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Payroll Accounting

Other Significant Liabilities

Filters

The following data is available for BOX Corporation at December 31,2011 : Ordinary shares, par $€ 10$ (authorized 15,000 shares\} $\in 100,000$ Treasury Shares (at cost $€ 15$ per share) 600 Based on the data, how many ordinary shares are outstanding?