Question 1

Which one of the following is not an ownership right of a common shareholder?

Accepted Answer

A)  to vote in the election of officers 
B)  to declare dividends on the common shares 
C)  to share in assets upon liquidation 
D)  to share in corporate net income

Question 2

Cambridge Corp. declared a 5% stock dividend. Will Wales owned 300 shares of Cambridge before the dividend. Cambridge shares were trading at $21 before the dividend. Which of the following will be true after the dividend is distributed?

Accepted Answer

A)  The total market value of Will's shares was $6,300 before the stock dividend but will probably decrease after the stock dividend. 
B)  The total market value of Will's shares was $6,300 before the stock dividend and $6,615 after the stock dividend. 
C)  Will owned 300 shares before the stock dividend and 315 shares after the stock dividend. 
D)  Fewer investors will be able to buy Cambridge shares.

Question 3

Use the following information for questions.
On July 15, 2018, the board of directors of George Easton Limited declared a cash dividend of $0.50 per share on 84,000 common shares. The dividend is to be paid on August 15, 2018, to shareholders of record on July 31, 2018.
-The journal entry to be recorded on July 15, 2018, will include a

Accepted Answer

A)  debit to Dividends Payable. 
B)  debit to Dividends Declared. 
C)  credit to Cash. 
D)  credit to Retained Earnings.

Question 4

Use the following information for questions.
On July 15, 2018, the board of directors of George Easton Limited declared a cash dividend of $0.50 per share on 84,000 common shares. The dividend is to be paid on August 15, 2018, to shareholders of record on July 31, 2018.
-The effects of the journal entry to record the payment of the dividend on August 15, 2018, are to

Accepted Answer

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

Question 5

At December 31, 2018, Fashion Forward Inc. has 15,000, $4, cumulative preferred shares issued. If the board of directors declares a $55,000 dividend at this date

Accepted Answer

A)  the company will still owe the preferred shareholders $5,000 and should record a dividend payable for this amount. 
B)  the company will owe the preferred shareholders nothing further. 
C)  $5,000 will be disclosed as dividends in arrears in the notes to the financial statements. 
D)  the company still has to pay the preferred shareholders $60,000, regardless of what amount was declared.

Question 6

The statement of changes in equity discloses changes in total shareholders' equity for the period as well as changes in each shareholders' equity account.

Accepted Answer

A) True 
 B)False

Question 7

For a corporation reporting under IFRS, when shares are issued for a noncash consideration and a ready market for the shares exists, they are recorded at

Accepted Answer

A)  zero. 
B)  the fair value of the shares. 
C)  the fair value of the assets acquired. 
D)  the average of the fair value of the shares and the fair value of the assets acquired.

Question 8

The liability for a cash dividend is recorded on the date of record, because it is on that date that the shareholders who will receive the dividend are identified.

Accepted Answer

A) True 
 B)False

Question 9

Preferred shares are generally issued to appeal to a larger segment of potential investors.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following events would not require a journal entry on a corporation's books?

Accepted Answer

A)  2-for-1 stock split 
B)  100% stock dividend 
C)  2% stock dividend 
D)  $1 per share cash dividend

Question 11

A stock dividend results in a decrease in

Accepted Answer

A)  current liabilities. 
B)  net income. 
C)  share capital. 
D)  retained earnings.

Question 12

Which one of the following would not be considered an advantage of the corporate form of organization?

Accepted Answer

A)  limited liability of shareholders 
B)  separate legal existence 
C)  continuous life 
D)  government regulation

Question 13

Legal capital

Accepted Answer

A)  can be distributed to shareholders. 
B)  does not need to remain invested in the corporation. 
C)  can be distributed to shareholders up to the limit of their investment. 
D)  cannot be distributed to the shareholders, but must remain invested in the corporation.

Question 14

The authorization of common shares

Accepted Answer

A)  must be approved by Canada Revenue Agency. 
B)  does not require a journal entry. 
C)  increases shareholders' equity. 
D)  decreases shareholders' equity.

Question 15

The effect of a stock dividend is to

Accepted Answer

A)  decrease total assets and shareholders' equity. 
B)  change the composition of shareholders' equity. 
C)  decrease total assets and total liabilities. 
D)  increase the book value per share of common shares.

Question 16

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Accepted Answer

A) True 
 B)False

Question 17

Identify and discuss the major characteristics of a corporation.

Accepted Answer

The answer of Identify and discuss the major characteristics of...

Question 18

The effect of the declaration of a cash dividend is to

Accepted Answer

The answer of The effect of the declaration of a...

Exam 11: Reporting and Analyzing Shareholders Equity

Which one of the following is not an ownership right of a common shareholder?

Cambridge Corp. declared a 5% stock dividend. Will Wales owned 300 shares of Cambridge before the dividend. Cambridge shares were trading at $21 before the dividend. Which of the following will be true after the dividend is distributed?

At December 31, 2018, Fashion Forward Inc. has 15,000, $4, cumulative preferred shares issued. If the board of directors declares a $55,000 dividend at this date

The statement of changes in equity discloses changes in total shareholders' equity for the period as well as changes in each shareholders' equity account.

For a corporation reporting under IFRS, when shares are issued for a noncash consideration and a ready market for the shares exists, they are recorded at

The liability for a cash dividend is recorded on the date of record, because it is on that date that the shareholders who will receive the dividend are identified.

Preferred shares are generally issued to appeal to a larger segment of potential investors.

Which one of the following events would not require a journal entry on a corporation's books?

A stock dividend results in a decrease in

Which one of the following would not be considered an advantage of the corporate form of organization?

Legal capital

The authorization of common shares

The effect of a stock dividend is to

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Identify and discuss the major characteristics of a corporation.

The effect of the declaration of a cash dividend is to