Question 1

A proxy is:

Accepted Answer

A)   A document that gives a designated agent of a shareholder the right to vote on the shareholder's behalf.
B)   A contractual commitment by an investor to purchase unissued shares.
C)   An amount of assets defined by law that shareholders must invest and leave invested in a corporation.
D)   The right of ordinary shareholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional ordinary shares issued by the corporation.
E)   An arbitrary amount assigned to no-par shares by the corporation's board of directors.F) C) and D)
G) B) and E)

Question 2

Retained earnings:

Accepted Answer

A)   Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.
B)   Can only be appropriated by setting aside a cash fund.
C)   Represent an amount of cash available to pay shareholders.
D)   Are never adjusted for anything other than net income or dividends.
E)   All of these.F) A) and B)
G) C) and D)

Question 3

The price-earnings ratio is calculated by dividing:

Accepted Answer

A)   Market value per share by earnings per share.
B)   Earnings per share by market value per share.
C)   Dividends per share by earnings per share.
D)   Dividends per share by market value per share.
E)   Market value per share by dividends per share.F) B) and D)
G) A) and B)

Question 4

A company's board of directors votes to declare a cash dividend of $.75 per share. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is:

Accepted Answer

A)   $10,250.
B)   $14,625.
C)   $7,125.
D)   $7,500.
E)   $11,250.F) None of the above
G) B) and E)

Question 5

There is a credit balance in Share Premium-Treasury Shares of $1,500:
$2,500 - $1,000 = $1,500

Accepted Answer

The answer of There is a credit balance in Share...

Question 6

A bonus issue or share dividend transfers:

Accepted Answer

A)   Contributed capital to retained earnings.
B)   Retained earnings to contributed capital.
C)   Retained earnings to assets.
D)   Contributed capital to assets.
E)   Assets to contributed capital.F) B) and C)
G) A) and B)

Question 7

Xtreme Sports has $100,000 of 8% noncumulative, nonparticipating, preference shares outstanding. Xtreme Sports also has $500,000 of ordinary shares outstanding. In the company's first year of operation, no dividends were paid. During the second year, Xtreme Sports paid cash dividends of $30,000. This dividend should be distributed as follows:

Accepted Answer

A)   $8,000 preference; $22,000 ordinary.
B)   $16,000 preference; $14,000 ordinary.
C)   $7,500 preference; $22,500 ordinary.
D)   $15,000 preference; $15,000 ordinary.
E)   $0 preference; $30,000 ordinary.F) None of the above
G) B) and E)

Question 8

A company has 500,000 ordinary shares authorized, 400,000 ordinary shares issued, and 15,000 ordinary shares in treasury at the current year-end. It paid $0.24 per share in cash dividends during the year. The year-end market price of the share is $15. Calculate (1) the total dividends paid and (2) the dividend yield.

Accepted Answer

(1) $0.24 x (400,000...

Question 9

Organization expenses of a corporation often include legal fees and promoter fees.

Accepted Answer

A) True 
 B)False

Question 10

A share split is the distribution of additional shares to shareholders according to their percent of ownership.

Accepted Answer

A) True 
 B)False

Question 11

Stated value share is par share that is assigned a value per share by the corporation's board of directors.

Accepted Answer

A) True 
 B)False

Question 12

The retirement of shares:

Accepted Answer

A)   Reduces the number of issued shares.
B)   Does not reduce the number of authorized shares.
C)   Removes all paid-in capital amounts related to the retired shares.
D)   Is not the same thing as treasury shares.
E)   All of these.F) C) and E)
G) A) and B)

Question 13

The declaration of cash dividends reduces retained earnings.

Accepted Answer

A) True 
 B)False

Question 14

A company reports the following shareholders' equity:
  Compute the (1) number of ordinary shares outstanding and (2) book value per ordinary share.

Accepted Answer

(1) Number of ordinary shares ...

Question 15

A share split increases total shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 16

A premium on ordinary shares:

Accepted Answer

A)   Is the amount paid in excess of par by purchasers of newly issued shares.
B)   Is the difference between par value and issue price when the amount paid is below par.
C)   Represents profit from issuing shares.
D)   Represents capital gain on sale of shares.
E)   Is prohibited in most states.F) A) and B)
G) A) and C) A

Question 17

A corporation issued 6,000 $10 par value ordinary shares in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

Accepted Answer

A)   A debit to Share Capital-Ordinary for $60,000.
B)   A debit to Land for $60,000.
C)   A credit to Land for $60,000.
D)   A credit to Share Premium-Ordinary for $24,000.
E)   A credit to Share Capital-Ordinary for $84,000.F) A) and D)
G) All of the above

Question 18

A bonus issue or share dividend decreases the market price of the company's share.

Accepted Answer

A) True 
 B)False  True

Question 19

The board of directors of a corporation:

Accepted Answer

A)   Are elected by the corporate registrar.
B)   Are responsible for day-to-day operations of the business.
C)   Do not have the power to bind the corporation to contracts, due to lack of mutual agency.
D)   May not also be executive officers of the corporation, due to the separate entity principle.
E)   Are responsible for and have final authority for managing corporate activities.F) C) and D)
G) D) and E) E

Question 20

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average) ordinary shares.

Accepted Answer

A) True 
 B)False

Exam 13: Accounting for Corporations

A proxy is:

Correct Answer
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Retained earnings:

Correct Answer
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The price-earnings ratio is calculated by dividing:

Correct Answer
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A company's board of directors votes to declare a cash dividend of $.75 per share. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is:

Correct Answer
verified

There is a credit balance in Share Premium-Treasury Shares of $1,500: $2,500 - $1,000 = $1,500

Correct Answer
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A bonus issue or share dividend transfers:

Correct Answer
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Correct Answer
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Correct Answer
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(1) $0.24 x (400,000...
View Answer

Organization expenses of a corporation often include legal fees and promoter fees.

Correct Answer
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A share split is the distribution of additional shares to shareholders according to their percent of ownership.

Correct Answer
verified

Stated value share is par share that is assigned a value per share by the corporation's board of directors.

Correct Answer
verified

The retirement of shares:

Correct Answer
verified

The declaration of cash dividends reduces retained earnings.

Correct Answer
verified

A company reports the following shareholders' equity: Compute the (1) number of ordinary shares outstanding and (2) book value per ordinary share.

Correct Answer
verified
(1) Number of ordinary shares ...
View Answer

A share split increases total shareholders' equity.

Correct Answer
verified

A premium on ordinary shares:

Correct Answer
verified
A

A corporation issued 6,000 $10 par value ordinary shares in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

Correct Answer
verified

A bonus issue or share dividend decreases the market price of the company's share.

Correct Answer
verified
True

The board of directors of a corporation:

Correct Answer
verified
E

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average) ordinary shares.

Correct Answer
verified

Exam 13: Accounting for Corporations

A proxy is:

Correct AnswerverifiedShow Answer

Retained earnings:

Correct AnswerverifiedShow Answer

The price-earnings ratio is calculated by dividing:

Correct AnswerverifiedShow Answer

A company's board of directors votes to declare a cash dividend of $.75 per share. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is:

Correct AnswerverifiedShow Answer

There is a credit balance in Share Premium-Treasury Shares of $1,500: $2,500 - $1,000 = $1,500

Correct AnswerverifiedShow Answer

A bonus issue or share dividend transfers:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverified(1) $0.24 x (400,000...View AnswerShow Answer

Organization expenses of a corporation often include legal fees and promoter fees.

Correct AnswerverifiedShow Answer

A share split is the distribution of additional shares to shareholders according to their percent of ownership.

Correct AnswerverifiedShow Answer

Stated value share is par share that is assigned a value per share by the corporation's board of directors.

Correct AnswerverifiedShow Answer

The retirement of shares:

Correct AnswerverifiedShow Answer

The declaration of cash dividends reduces retained earnings.

Correct AnswerverifiedShow Answer

A company reports the following shareholders' equity: Compute the (1) number of ordinary shares outstanding and (2) book value per ordinary share.

Correct Answerverified(1) Number of ordinary shares ...View AnswerShow Answer

A share split increases total shareholders' equity.

Correct AnswerverifiedShow Answer

A premium on ordinary shares:

Correct AnswerverifiedA

A corporation issued 6,000 $10 par value ordinary shares in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

Correct AnswerverifiedShow Answer

A bonus issue or share dividend decreases the market price of the company's share.

Correct AnswerverifiedTrue

The board of directors of a corporation:

Correct AnswerverifiedE

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average) ordinary shares.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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(1) $0.24 x (400,000...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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(1) Number of ordinary shares ...
View Answer

Correct Answer
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Correct Answer
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A

Correct Answer
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Correct Answer
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True

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E

Correct Answer
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