multiple choice find the best answer in each Question

1)Preference share that has a claim on any prior year dividends that may have passed is

A.

Cumulative

B.

Non-cumulative

C.

Participating

D.

Non-participating

2)Fully participating preference share means that

A.The ordinary shareholders receive a dividend rate per share equal to the preference share and all excess dividends are given to the ordinary shareholders

B.The ordinary shareholders receive a dividend rate per share equal to the preference share and all excess dividends go to the preference shareholders

C.The ordinary shareholders receive a dividend rate per share equal to the preference share and all excess dividends are shared proportionately between the two classes

D.The preference shareholders receive their full dividend and any excess is given to the ordinary shareholders

3)Select the statement that is incorrect concerning the appropriation of accumulated profits

A.Appropriations of accumulated profits do not change the total amount of shareholders' equity

B.Appropriations of accumulated profits reflect funds set aside for a designated purpose, such as plant expansion

C.Appropriations of accumulated profits can be made as a result of contractual requirements

D.Appropriations of accumulated profits can be made at the discretion of the board of directors

4)Non-stock dividends shall be recognized as liabilities on the

A.

Date of declaration

C.

Date of record

B.

Date of payment

D.

Date of issuance of check

5)Dividends in arrears are shown on the financial statements as

A.

Current liabilities

C.

Contra-equity accounts

B.

Contra-equity accounts

D.

Note disclosures only

6)Noncumulative preference dividends in arrears

A.Are not paid and not disclosed

B.Must be paid before any other cash dividend can be distributed

C.Are disclosed as a liability until paid

D.Are paid to preference shareholders if sufficient funds are available

7)The declaration and issuance of a share dividend

A.Increases ordinary shares outstanding and total equity

B.Decreases retained earnings but does not change total equity

C.May increase or decrease share premium but does not change total equity

D.Increases retained earnings and total equity

8)Which is incorrect in relation to appropriations of retained earnings

A.Appropriations do not reduce total retained earnings

B.The only proper way to eliminate an appropriation of retained earnings after it has served its purpose is to credit the unappropriated retained earnings account

C.An appropriation of retained earnings does not mean the assets are segregated

D.When treasury shares are purchased, retained earnings must be appropriated equal to the par or stated value of such shares.

9)Which of the following statements is true?

A.When treasury share is accounted for by the cost method, the treasury share account is reported as an unallocated negative element of total shareholders' equity.

B.When treasury share is formally retired, the only accounting recognition needed is a note to the financial statements.

C.No entry is required to record treasury share received as a donation because it has no cost.

D.If treasury share is purchased at a cost in excess of its book value and then retired, book value per share (for the remaining shares) will remain the same.

10)How would total stockholders' equity be affected by declaration of each of the following?

Stock dividendStock split

A.No effectIncrease

B.DecreaseDecrease

C.DecreaseNo effect

D.No effectNo effect