Question 1

A company is a l_________ entity,separate and distinct from its owners at law.

Accepted Answer

legal

Question 2

Company income tax payable is calculated by multiplying the company tax rate by company t_________________ i______________.

Accepted Answer

taxable income

Question 3

When a newly established company issues shares for the first time the directors will issue the shares:

Accepted Answer

A) at the price of $1 per share 
B) at the market price 
C) at a price established in consultation with ASIC 
D) at the highest price that they expect that the shareholders will be prepared to pay 
A) at the price of $1 per share 
B) at the market price 
C) at a price established in consultation with ASIC 
D) at the highest price that they expect that the shareholders will be prepared to pay D

Question 4

Under current accounting standards share issue expenses must be treated as:

Accepted Answer

A) An asset 
B) An expense 
C) A deduction from the proceeds of the share issue 
D) A liability 
A) An asset 
B) An expense 
C) A deduction from the proceeds of the share issue 
D) A liability

Question 5

Shares which have preferential treatment over ordinary shares are called __________________ shares.

Accepted Answer

The answer of Shares which have preferential treatment over ordinary...

Question 6

The Current Tax Liability and Final Dividend Payable accounts are both classified as current _______________ in the balance sheet.

Accepted Answer

The answer of The Current Tax Liability and Final Dividend...

Question 7

Which class of preference shares have the right to receive further dividends above their fixed rate once ordinary shares have received a stated percentage?

Accepted Answer

A) Bonus preference shares 
B) Redeemable preference shares 
C) Participating preference shares 
D) Cumulative preference shares 
A) Bonus preference shares 
B) Redeemable preference shares 
C) Participating preference shares 
D) Cumulative preference shares

Question 8

If a dividend of 10c per share is declared how much will a shareholder who owns 1000 shares receive if the shares were issued for $2 each and are currently selling on the stock market at $5.40 each?

Accepted Answer

A) $100 
B) $200 
C) $540 
D) $1000 
A) $100 
B) $200 
C) $540 
D) $1000

Question 9

Which of these is not a reason for declaring a share dividend?

Accepted Answer

A) To conserve the company's cash instead of declaring a cash dividend 
B) To decrease the market price of the shares 
C) To raise extra capital for the company 
D) To stave off a takeover 
A) To conserve the company's cash instead of declaring a cash dividend 
B) To decrease the market price of the shares 
C) To raise extra capital for the company 
D) To stave off a takeover

Question 10

How many of these statements are true? The difference between a share split and a share dividend bonus issue)is that a bonus issue,but not a share split:
i.Increases the share capital and reduces the retained earnings
ii.Reduces the market price of the shares
iii.Requires accounting entries to be made in the ledger

Accepted Answer

A) i. 
B) ii,iii 
C) i,ii 
D) i,iii 
A) i. 
B) ii,iii 
C) i,ii 
D) i,iii

Question 11

The primary purpose of a share split is to:

Accepted Answer

A) Increase the total capital of the company 
B) Decrease the total capital of the company 
C) Reduce retained earnings 
D) Reduce the market value of the company's shares 
A) Increase the total capital of the company 
B) Decrease the total capital of the company 
C) Reduce retained earnings 
D) Reduce the market value of the company's shares

Question 12

Malaysia Company Ltd decided to issue 200 000 ordinary shares for $2.10c each,payable in instalments,40c on application,$1 on allotment and the balance payable at the discretion of the company.Applications were received for 220 000 shares.The shares were allotted by the directors at a meeting held a week after the close of applications.After refunding applications for 20 000 shares the correct journal entry to transfer the application money to the share capital account is:

Accepted Answer

A) Debit application $88 000; credit trust bank account $88 000 
B) Debit trust bank account $80 000; credit share capital account $80 000 
C) Debit application $88 000; credit share capital $88 000 
D) Debit application $80 000; credit share capital $80 000 
A) Debit application $88 000; credit trust bank account $88 000 
B) Debit trust bank account $80 000; credit share capital account $80 000 
C) Debit application $88 000; credit share capital $88 000 
D) Debit application $80 000; credit share capital $80 000

Question 13

When a company is incorporated ASIC issues it with a:

Accepted Answer

A) Certificate of registration 
B) Birth certificate 
C) License 
D) Prospectus 
A) Certificate of registration 
B) Birth certificate 
C) License 
D) Prospectus

Question 14

XYZ Ltd was incorporated on 1 January 2011.A private placement of 5000 shares at $1 a share was made and the public was invited to subscribe for 95 000 shares at the same price.The public issue called for payment in the following instalments:
A.40 cents on application
B.30 cents on allotment
C.payment of the call for the balance outstanding by 30 September 2013.
Applications were received for 90 000 shares.All money due on allotment was received by 30 May 2011.
The balance of the Share Capital of XYZ Ltd at 30 June 2011 was:

Accepted Answer

A) $70 000 
B) $68 000 
C) $71 500 
D) $100 000 
A) $70 000 
B) $68 000 
C) $71 500 
D) $100 000

Question 15

Any approach to the general public by a public company to issue shares,loans,or debentures must be accompanied by a p__________.

Accepted Answer

The answer of Any approach to the general public by...

Question 16

To be classified as 'small' under the Corporations Act a Proprietary company must normally satisfy two out of three conditions.Which of these are two of those conditions?

Accepted Answer

A)  Consolidated gross revenue less than $ \$ 25 $ million and consolidated gross assets less than $ \$ 12.5 $ million 
B)  Consolidated gross assets less than $ \$ 12.5 $ million and fewer than 200 employees 
C)  Consolidated gross revenue less than $ \$ 25 $ million and less than 200 employees 
D)  Consolidated gross assets less than $ \$ 5 $ million and less than 50 employees 
A)  Consolidated gross revenue less than $ \$ 25 $ million and consolidated gross assets less than $ \$ 12.5 $ million 
B)  Consolidated gross assets less than $ \$ 12.5 $ million and fewer than 200 employees 
C)  Consolidated gross revenue less than $ \$ 25 $ million and less than 200 employees 
D)  Consolidated gross assets less than $ \$ 5 $ million and less than 50 employees

Question 17

Daisy and Wing each own 8,000 shares in the Texas Company Ltd.If Daisy sells her shares directly to Wing:

Accepted Answer

A) The Texas Company share capital increases 
B) The Texas Company share capital decreases 
C) The Texas Company share capital remains the same 
D) The Texas Company bank increases 
A) The Texas Company share capital increases 
B) The Texas Company share capital decreases 
C) The Texas Company share capital remains the same 
D) The Texas Company bank increases

Question 18

If applications in response to a public issue of shares are for fewer shares than the company has stated it will issue,the issue is said to be _________-_________________.

Accepted Answer

The answer of If applications in response to a public...

Question 19

A no cost,pro rata distribution of a company's shares to its shareholders is known as:

Accepted Answer

A) A special dividend 
B) A share dividend 
C) A preference dividend 
D) A dividend in arrears 
A) A special dividend 
B) A share dividend 
C) A preference dividend 
D) A dividend in arrears

Question 20

Which statement relating to reserves is not true?

Accepted Answer

A) They represent items of equity other than share capital 
B) They represent cash set aside to be drawn on in hard times 
C) Retained earnings is a type of reserve account 
D) When a non-current asset is revalued upwards a revaluation reserve is created 
A) They represent items of equity other than share capital 
B) They represent cash set aside to be drawn on in hard times 
C) Retained earnings is a type of reserve account 
D) When a non-current asset is revalued upwards a revaluation reserve is created

Exam 16: Companies: Formation and Operations

A company is a l_________ entity,separate and distinct from its owners at law.

Company income tax payable is calculated by multiplying the company tax rate by company t_________________ i______________.

When a newly established company issues shares for the first time the directors will issue the shares:

Under current accounting standards share issue expenses must be treated as:

Shares which have preferential treatment over ordinary shares are called __________________ shares.

The Current Tax Liability and Final Dividend Payable accounts are both classified as current _______________ in the balance sheet.

Which class of preference shares have the right to receive further dividends above their fixed rate once ordinary shares have received a stated percentage?

If a dividend of 10c per share is declared how much will a shareholder who owns 1000 shares receive if the shares were issued for $2 each and are currently selling on the stock market at $5.40 each?

Which of these is not a reason for declaring a share dividend?

The primary purpose of a share split is to:

When a company is incorporated ASIC issues it with a:

Any approach to the general public by a public company to issue shares,loans,or debentures must be accompanied by a p__________.

To be classified as 'small' under the Corporations Act a Proprietary company must normally satisfy two out of three conditions.Which of these are two of those conditions?

Daisy and Wing each own 8,000 shares in the Texas Company Ltd.If Daisy sells her shares directly to Wing:

If applications in response to a public issue of shares are for fewer shares than the company has stated it will issue,the issue is said to be _________-_________________.

A no cost,pro rata distribution of a company's shares to its shareholders is known as:

Which statement relating to reserves is not true?

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Retailing

Accounting for Systems

Accounting for Manufacturing

Cost Accounting Systems

Cash Management and Internal Control

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis,profitability Analysis and Capital Budgeting

Partnerships: Formation,operation and Reporting

Regulation and the Conceptual Framework

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation,disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Liabilities

Analysis and Interpretation of Financial Statements

Filters

Company income tax payable is calculated by multiplying the company tax rate by company t___ i.

If applications in response to a public issue of shares are for fewer shares than the company has stated it will issue,the issue is said to be _-_________.