Question 1

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 shareholders bind the corporation.
D)  It may enter into binding legal contracts in its own name.

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.

Question 3

When preferred shares are cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Accepted Answer

A) True 
 B)False

Question 4

Identify and discuss the major characteristics of a corporation.

Accepted Answer

The major characteristics of a corporati...

Question 5

Prepare the entries for cash dividends, stock dividends, and stock splits, and understand their financial impact.

Accepted Answer

Entries for both cash and stock dividend...

Question 6

$3 cumulative preferred shares means that each preferred shareholder is eligible to receive a quarterly dividend of $3 per share.

Accepted Answer

A) True 
 B)False

Question 7

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 profits

Question 8

When retained earnings are restricted, total retained earnings

Accepted Answer

A)  are unaffected.
B)  increase.
C)  decrease.
D)  may increase or decrease.

Question 9

Authorized shares of a corporation

Accepted Answer

A)  are the minimum amount of shares that must be issued.
B)  increase shareholders' equity.
C)  are specified in its articles of incorporation.
D)  must be recorded by a formal accounting entry.

Question 10

Cash dividends are declared out of

Accepted Answer

A)  Dividends Payable.
B)  Preferred Shares.
C)  Common Shares.
D)  Retained Earnings.

Question 11

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 12

Under IFRS, which of the following describes how other comprehensive income should be reported?

Accepted Answer

A)  Must be reported in a statement of comprehensive income
B)  Should not be reported in the financial statements, but should only be disclosed in the footnotes
C)  Must be reported in the income statement
D)  Must be reported in the shareholders' equity section of the statement of financial position

Question 13

Return on common shareholders' equity is a ratio that

Accepted Answer

A)  is calculated by dividing profit plus preferred dividends by average common shareholders' equity.
B)  shows the relationship between profit available for common shareholders and average common shareholders' equity.
C)  cannot be calculated if the company has preferred shares in addition to common shares.
D)  is calculated by dividing profit plus preferred dividends by average common shareholders' equity and shows the relationship between profit available for common shareholders and average common shareholders' equity.

Question 14

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 15

Contributed capital is the amount shareholders paid or contributed to the corporation in exchange for shares of ownership.

Accepted Answer

A) True 
 B)False

Question 16

Use the following information for questions 
On July 15, 2015, 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, 2015, to shareholders of record on July 31, 2015.
-The effects of the journal entry to record the declaration of the dividend on July 15, 2015, are to

Accepted Answer

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

Question 17

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)  Stock Dividends.

Question 18

The return on common shareholders' equity is calculated by dividing profit

Accepted Answer

A)  by ending common shareholders' equity.
B)  by average common shareholders' equity.
C)  less preferred dividends by ending common shareholders' equity.
D)  less preferred dividends by average common shareholders' equity.

Question 19

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 20

Earnings per share is calculated by dividing the profit available to common shareholders by the number of common shares issued at year end.

Accepted Answer

A) True 
 B)False

Exam 11: Reporting and Analyzing Stockholders Equity

Identify and discuss the major characteristics of a corporation.

Correct Answer
verified
The major characteristics of a corporati...
View Answer

Authorized shares of a corporation

Correct Answer
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Contributed capital is the amount shareholders paid or contributed to the corporation in exchange for shares of ownership.

Correct Answer
verified

Correct Answer
verified

Under IFRS, which of the following describes how other comprehensive income should be reported?

Correct Answer
verified

The return on common shareholders' equity is calculated by dividing profit

Correct Answer
verified

When preferred shares are cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Correct Answer
verified

Prepare the entries for cash dividends, stock dividends, and stock splits, and understand their financial impact.

Correct Answer
verified
Entries for both cash and stock dividend...
View Answer

$3 cumulative preferred shares means that each preferred shareholder is eligible to receive a quarterly dividend of $3 per share.

Correct Answer
verified

Cash dividends are declared out of

Correct Answer
verified

Return on common shareholders' equity is a ratio that

Correct Answer
verified

Earnings per share is calculated by dividing the profit available to common shareholders by the number of common shares issued at year end.

Correct Answer
verified

A corporate board of directors does not generally

Correct Answer
verified

When retained earnings are restricted, total retained earnings

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Which of the following is not true of a corporation?

Correct Answer
verified

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.

Correct Answer
verified

Exam 11: Reporting and Analyzing Stockholders Equity

Identify and discuss the major characteristics of a corporation.

Correct AnswerverifiedThe major characteristics of a corporati...View AnswerShow Answer

Authorized shares of a corporation

Correct AnswerverifiedShow Answer

Contributed capital is the amount shareholders paid or contributed to the corporation in exchange for shares of ownership.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under IFRS, which of the following describes how other comprehensive income should be reported?

Correct AnswerverifiedShow Answer

The return on common shareholders' equity is calculated by dividing profit

Correct AnswerverifiedShow Answer

When preferred shares are cumulative, preferred dividends not declared in a given period are called dividends in arrears.

Correct AnswerverifiedShow Answer

Prepare the entries for cash dividends, stock dividends, and stock splits, and understand their financial impact.

Correct AnswerverifiedEntries for both cash and stock dividend...View AnswerShow Answer

$3 cumulative preferred shares means that each preferred shareholder is eligible to receive a quarterly dividend of $3 per share.

Correct AnswerverifiedShow Answer

Cash dividends are declared out of

Correct AnswerverifiedShow Answer

Return on common shareholders' equity is a ratio that

Correct AnswerverifiedShow Answer

Earnings per share is calculated by dividing the profit available to common shareholders by the number of common shares issued at year end.

Correct AnswerverifiedShow Answer

A corporate board of directors does not generally

Correct AnswerverifiedShow Answer

When retained earnings are restricted, total retained earnings

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not true of a corporation?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct Answer
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The major characteristics of a corporati...
View Answer

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Entries for both cash and stock dividend...
View Answer

Correct Answer
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