1

A companys authorized shares are:

the number of shares authorized to receive regular dividends.

the number of shares with the authority to vote on the board of directors.

the total number of shares the company is allowed to sell.

the number of shares owned by shareholders.

2

A company issues 5,000 common shares to its lawyers in settlement of their bill for $25,000. The shares are currently trading at $6 per share. The entry to record this transaction will credit common shares for:

$25,000.

$5,000.

$125,000.

$30,000.

3.

Convertible Preferred Shares:

can be exchanged for common shares at a specified ratio.

can be exchanged for services if necessary.

do not exist in Canada.

can be exchanged for cash at any time.

4.

Return on equity, considered by many to be the most important measure of a firm's profitability, is calculated by dividing:

average shareholders equity by profit.

total shareholders' equity by the number of common shares outstanding.

market value per share by the number of common shares outstanding.

profit by average shareholders' equity.

5.

A common stock dividend results in a decrease in retained earnings and an increase in common shares at

the average cost of the shares issued.

the fair value of shares issued at the declaration date.

the fair value of shares issued at the distribution date.

the weighted average cost of the shares issued.

6.

At January 1, the beginning of the year, a company had 10,000 common shares outstanding. On February 19, the company issued 2,000 shares; and on September 9, the company declared and distributed a 10% stock dividend. At the end of the year, how many common shares are outstanding?

12,000

11,000

13,000

13,200

7.

When a company with no contributed surplus reacquires its own shares at a cost greater than their average per share amount, the loss is debited to

Loss on Reacquisition of Common Shares.

Common Shares.

Retained Earnings.

Contributed Surplus Reacquisition of Shares.