Question 1

Indicate the respective effects of the declaration of a cash dividend on the following statement of financial position sections:

Accepted Answer

The answer of Indicate the respective effects of the declaration...

Question 2

When setting the price of a new share issue, a corporation does not need to consider

Accepted Answer

A)  future net income. 
B)  expected dividend rate. 
C)  current financial position. 
D)  future trading on the secondary market.

Question 3

The two ways that a corporation can be classified by ownership are

Accepted Answer

A)  publicly held and privately held. 
B)  shares and non-shares. 
C)  federal and provincial. 
D)  majority and minority.

Question 4

Limited liability of shareholders means

Accepted Answer

A)  dividends will be paid regardless of net income. 
B)  creditors have no legal claim on a shareholder's personal assets. 
C)  the life of the corporation is limited. 
D)  deferral or reduction of taxes.

Question 5

Ethel Inc. has 15,000, $3, noncumulative preferred shares and 200,000 common shares issued. What is the total annual dividend on the preferred shares?

Accepted Answer

A)  $15,000 
B)  $45,000 
C)  $200,000 
D)  $400,000

Question 6

One of the reasons a company may reacquire its own shares is to reduce the market value to make the shares more affordable.

Accepted Answer

A) True 
 B)False

Question 7

The liability of a shareholder is usually limited to the shareholder's investment in the corporation.

Accepted Answer

A) True 
 B)False

Question 8

The sale of common shares should be recorded as a

Accepted Answer

A)  debit to Retained Earnings and a credit to Cash. 
B)  debit to Cash and a credit to Retained Earnings. 
C)  debit to Cash and a credit to Common Shares. 
D)  debit to Common Shares and a credit to Cash.

Question 9

Retained earnings that are restricted are unavailable for dividends.

Accepted Answer

A) True 
 B)False

Question 10

The board of directors of Wessex Inc. declared a cash dividend on November 15, 2018, to be paid on December 15, 2018, to shareholders owning shares on November 30, 2018. Given these facts, the date of November 30, 2018, is referred to as the

Accepted Answer

A)  declaration date. 
B)  record date. 
C)  payment date. 
D)  authorization date.

Question 11

Return on common shareholders' equity is calculated by dividing net income by ending shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 12

The declaration of a stock dividend will

Accepted Answer

A)  increase share capital. 
B)  change total shareholders' equity. 
C)  increase total liabilities. 
D)  increase total assets.

Question 13

Stock dividends and stock splits have the following effects on retained earnings:

Accepted Answer

The answer of Stock dividends and stock splits have the...

Question 14

Shareholders directly elect the corporation's

Accepted Answer

A)  president. 
B)  board of directors. 
C)  controller. 
D)  auditor.

Question 15

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

Accepted Answer

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

Question 16

Which of the following statements reflects the transferability of ownership rights in a corporation?

Accepted Answer

A)  If a shareholder decides to transfer ownership, he/she must transfer all of his/her shares. 
B)  A shareholder may dispose of part or all of his/her shares. 
C)  A shareholder must obtain permission of the board of directors before selling shares. 
D)  A shareholder must obtain permission from at least three other shareholders before selling shares.

Question 17

A company may reacquire its own shares for all of the following reasons except to

Accepted Answer

A)  enhance market value. 
B)  reduce market value. 
C)  increase basic earnings per share. 
D)  have additional shares available for use.

Question 18

A corporation is not an entity that is separate and distinct from its owners.

Accepted Answer

A) True 
 B)False

Question 19

Stock Dividends Distributable is reported as a liability on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 20

If a corporation declares a 10% stock dividend on its common shares, the account to be debited on the date of declaration is

Accepted Answer

A)  Stock Dividends Distributable. 
B)  Common Shares. 
C)  Share Capital. 
D)  Dividends Declared.

Exam 11: Reporting and Analyzing Shareholders Equity

Indicate the respective effects of the declaration of a cash dividend on the following statement of financial position sections:

When setting the price of a new share issue, a corporation does not need to consider

The two ways that a corporation can be classified by ownership are

Limited liability of shareholders means

Ethel Inc. has 15,000, $3, noncumulative preferred shares and 200,000 common shares issued. What is the total annual dividend on the preferred shares?

One of the reasons a company may reacquire its own shares is to reduce the market value to make the shares more affordable.

The liability of a shareholder is usually limited to the shareholder's investment in the corporation.

The sale of common shares should be recorded as a

Retained earnings that are restricted are unavailable for dividends.

The board of directors of Wessex Inc. declared a cash dividend on November 15, 2018, to be paid on December 15, 2018, to shareholders owning shares on November 30, 2018. Given these facts, the date of November 30, 2018, is referred to as the

Return on common shareholders' equity is calculated by dividing net income by ending shareholders' equity.

The declaration of a stock dividend will

Stock dividends and stock splits have the following effects on retained earnings:

Shareholders directly elect the corporation's

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

Which of the following statements reflects the transferability of ownership rights in a corporation?

A company may reacquire its own shares for all of the following reasons except to

A corporation is not an entity that is separate and distinct from its owners.

Stock Dividends Distributable is reported as a liability on the statement of financial position.

If a corporation declares a 10% stock dividend on its common shares, the account to be debited on the date of declaration is