Chapter 20- 23 QUIZZER PDF

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When shares with par value are sold, the proceeds shall be credited to the a. Share capital b. Share premium c. Retained earnings d. Share capital account to the extent of the par value of the shares issued with any excess being reflected in share premium When shares without par value are sold, the ...

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1. When shares with par value are sold, the proceeds shall be credited to the a. Share capital b. Share premium c. Retained earnings d. Share capital account to the extent of the par value of the shares issued with any excess being reflected in share premium 2. When shares without par value are sold, the excess proceeds over stated value shall be credited to a. Income b. Retained earnings c. Share premium d. Share capital 3. If shares are issued for a noncash consideration, the shares issued shall be measured by a. Fair value of the shares issued b. Par values of the shares issued c. Fair value of the noncash consideration received d. Carrying amount of the noncash consideration received 4. If shares are issued to extinguish a financial liability, what is the initial measurement of the shares issued? a. Par value of the shares issued b. Fair value of the shares issued c. Fair value of the liability extinguished d. Book value of the shares issued 5. When shares are issued in payment for the services, what is the least appropriate basis for recording the transaction? a. Fair value of the services received b. Par value of the shares issued c. Fair value of the shares issued d. Any of these provides an appropriate basis for recording the transaction 6. The cost of treasury shares acquired for noncash consideration is usually measured by a. Fair value of the noncash consideration b. Carrying amount of the noncash asset surrendered c. Par value of the shares d. Book value of the shares 7. If treasury shares are reissued for noncash consideration, the proceeds shall be measured by a. Fair value of the treasury shares b. Fair value of the noncash consideration c. Carrying amount of noncash consideration d. Cost of the treasury shares 8. Which statement is incorrect concerning treasury shares? a. Treasury shares shall be recorded at cost irrespective of whether acquired below or above par value. b. The total cost of treasury shares shall be deducted from shareholder’s equity. c. Treasury shares may be recognized as financial asset. d. Gain or loss on sale of treasury shares shall not be included in profit or loss. 9. “Loss” from sale of treasury shares shall be charged to a. Loss on sale of treasury shares to be reported as other expense b. Retained earnings and then share premium from treasury shares c. Share premium from treasury shares and then retained earnings d. Share premium from original issuance, share premium from treasury shares and then retained earnings 10. Gain and loss on retirement of treasury shares shall not be included in profit or loss. F the retirement results in a gain, such gain shall be credited to a. Share premium b. Retained earnings

c. Share capital d. Income

11. Loss on retirement of treasury shares shall be debited to a. Retained earnings b. Share premium from treasury shares and then retained earnings c. Share premium from treasury shares, share premium from original issuance and then retained earnings d. Share premium from original issuance, share premium from treasury shares and then retained earnings 12. Which statement best describes a possible result of treasury share transactions? a. May increase but not decrease retained earnings b. May increase net income if the cost method is used c. May decrease but not increase retained earnings d. May decrease but increase net income 13. Which statement is true concerning share capital transactions? a. Deposits on subscription to proposed increase in share capital should be reported as part of shareholder’s equity b. Subscriptions receivable from sale of share capital not currently collectible should be reflected as deduction from the related subscribed share capital c. Discount on share capital should be shown as deduction from total shareholder’s equity d. All of these statements are true concerning share capital transactions 14. Transaction costs directly attributable to the issuance of new shares should be a. Expensed immediately b. Charged to retained earnings c. Deducted from other comprehensive income d. Deducted from share premium arising from the share issuance 15. Costs of public offering of shares or costs that relate to “stock market listing of shares” should be a. Expensed immediately b. Considered as component of other comprehensive income c. Deducted from retained earnings d. Deducted from share premium arising from the share issuance 16. Transaction costs directly attributable to the issuance of new shares include all of the following, except a. Documentary stamp tax b. Underwriting fee c. SEC registration fee for new shares d. Road show presentation 17. What is the treatment of “joint costs” that relate to the concurrent listing and issuance of new shares, and listing of old existing shares? a. The joint costs should be expensed immediately b. The joint costs should be deducted from equity c. The joint costs should be deducted from retained earnings d. The joint costs should be allocated between the newly issued and listed shares and the newly listed old existing shares prorate based on the number of shares outstanding 18. When collectability is reasonably assured, the excess of the subscription price over the stated value of the no-par subscribed share capital shall be recorded as a. No par share capital b. Share premium when the subscription is recorded c. Share premium when the subscription is collected d. Share premium when the share capital is issued 19. When treasury shares are purchased for more than par value, what account or accounts shall be debited? a. Treasury shares for the par value and share premium for the excess of purchase price over the par value b. Share premium for the purchase price c. Treasury shares for the purchase price d. Treasury shares for the par value and retained earnings for the excess of the purchase price

over the par value

20. The purchase of treasury shares a. Decreases shares authorized b. Decreases shares issued c. Decreases shares outstanding d. Has no effect on shares outstanding 21. At the date of the financial statements, shares issued would excess shares outstanding as a result of a. Declaration of share split b. Declaration of a share dividend c. Purchase of treasury shares d. Payment in full of subscribed shares 22. The issuance of preference shares a. Increases preference shares outstanding b. Has no effect on preference shares outstanding c. Increases preference shares authorized d. Decreases preference shares authorized 23. When an entity calls in all of the preference shares for more than the original issue price, the excess paid above the original issue price should be a. Accounted for as loss on exchange b. Charged against share premium of ordinary shares c. Charged to discount on preference shares d. Charged against retained earnings 24. When preference shares are purchased and retired by the issuing entity for less than original price, proper accounting for the retirement a. Increases amount of dividends to ordinary shareholders b. Increases the contributed capital of the ordinary shareholders c. Increases reported income for the period d. Increases the treasury shares 25. Convertible preference shares a. Are compound financial instrument b. Include an option for the holder to convert preference shares into a fixed number ordinary shares c. Are accounted for a financial liability d. All of the choices are correct 26. How would a share split affect asset and shareholders’ equity, respectively? a. Increase and increase b. No effect and no effect c. No effect and increase d. Increase and no effect 27. How would a share split affect share premium and retained earnings, respectively? a. Increase and no effect b. No effect and no effect c. No effect and decrease d. Increase and decrease 28. In accounting for shareholder’s equity, the accountant is primarily concerned with which of the following? a. Determining the total amount of shareholders’ equity b. Distinguishing between realized and unrealized revenue c. Recording the source of each of the various elements of shareholders’ equity d. Making sure that the directors do not declare dividends in excess of retained earnings 29. Contributed capital does not include a. Share premium on ordinary and preference shares b. Preference share capital c. Capital resulting from reissuance of treasury shares at a price above acquisition price d. Capital accumulated by retention of earnings 30. Total shareholders’ equity represents

a. A claim against specific assets contributed by the owners b. The maximum amount that can be borrowed by the entity c. A claim against a portion of the total assets of an entity

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d. Only the amount of retained earnings The par value of an ordinary share represents a. The liquidation values of the share b. The book value of the share c. The legal nominal value assigned to the share d. The amount received by the entity when the share was originally issued The term residual owner means that shareholders a. Are entitled to a dividend every year in which the entity earns an income b. Have the rights to specific asset of the entity c. Bear the ultimate risks and receive the benefits of ownership d. Can negotiate individual contracts in behalf of the entity The residual interest in a corporation belongs to a. Management b. Creditors c. Ordinary shareholders d. Preference shareholders Treasury shares are a. Shares held as an investment by the treasurer b. Shares held as an investment by the corporation c. Issued and outstanding shares d. Issued but not outstanding Which of the following is not a method that may be used to account for treasury shares? a. Cost method b. Par value method c. Retained earnings method d. Constructive retirement method Only a memorandum entry is made when a. Entities grant share warrants to executives and employees as a form of compensation b. Entities include share warrants to make a security more attractive c. Entities issue rights to existing shareholders d. All of the choices are correct When an entity issued rights to existing shareholders to purchase unissued ordinary shares at more than par values, share premium would be recorded when the rights a. Lapsed b. Are exercised c. Become exercisable d. Are issued An ordinary shareholder does not possess which of the following? a. The right to share in the earnings of the corporation when dividends are declared b. The right to vote in the election of the board of directors of the corporation c. The right to direct ownership of the corporate assets d. The right to share proportionately in corporate assets in case of liquidation if such assets exceed the claims of creditors Which of the following is not one of the basic rights of a shareholder? a. The right to participate in earnings b. The right to maintain proportional interest in the corporation c. The right to participate in the proceeds of the sale of corporate assets upon liquidation of the corporation d. The right to inspect the accounting records of the corporation The preemptive right of an ordinary shareholder is the right to a. Share proportionately in corporate assets upon liquidation b. Share proportionately in any new shares of the same class c. Receive cash dividends before distribution to preference shareholders d. Exclude [reference shareholders from voting rights Discount on share capital

a. May be recorded as either an asset or an expense b. Shall be closed to income summary account c. May be offset against share premium on the same class of share capital...