Exam 16: Companies: Formation and Operations

At the end of the year a company declared a final cash dividend out of its retained earnings. Which of the following is the journal entry to record the declaration?

The person who maintains the minutes of the meetings of the directors and shareholders and represents the company in many legal and contractual matters is:

Which of the following statements concerning cash dividends is not true?

How many of the following statements, relating to ordinary shareholders, are true? Ordinary shareholders generally have greater risks than preference shareholders. Ordinary shareholders are the last to receive a distribution if the company is wound up. Ordinary shareholders have a greater opportunity for gain if the company is profitable than preference shareholders. Ordinary shareholders have the right to vote at meetings of the company.

The primary purpose of a share split is to:

Which is the true statement concerning preference shares?

When a company is incorporated ASIC issues it with a:

Under current accounting standards share issue expenses must be treated as a(n):

Which of these is not one of the three major categories that a company's equity can be divided into?

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 and refunds were made for 20 000 shares. The journal entry to record the full receipt of the allotment instalment is which of the following?

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 and refunds were made for 20 000 shares. The correct journal entry to record the amount due to the company for the allotment instalment is which of the following?

Under current accounting standards share issue expenses are treated as a(n):

Fletcher Ltd was incorporated on 1 January 2014 and on that date issued: During December 2017 DT Ltd declared a total of $5000 in dividends. This was the first dividend declared by DT Ltd, that is, no dividends were declared or paid during the first two years of operations. If the preference shares are cumulative and non-participating the total amount of the $5000 dividend that will be available for payment to the ordinary shareholders is:

Diamonta 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, which of the following is the correct journal entry to transfer the application money to the share capital account?

A company is a legal entity and as such has an additional expense for ________________ in its income statement that sole traders and partnerships do not have.

Kent Ltd issued 15 000 shares with an issue price of $1.60 on which the full price has been paid to the company. The maximum additional amount the shareholders can be asked to contribute if the company cannot pay its debts is:

How many of the following are reasons for a company to declare a share dividend (bonus issue)? To reduce the market price of their shares. To capitalise the retained earnings of the company. To conserve cash.

It is true that a private company:

A legal document accompanying an invitation to purchase shares, containing information about the issuing company, is called a(n):

Which of these accounts used to record the issue of shares is a permanent account?