Questions 23 to 32 are independent of each other. Unsure 23 32 Which of the following is NOT TRUE? Select one: a. If the stated rate is equal to the market rate on the issuance date of a bond, no premium or discount on the bond will need to be recorded O b. Private companies are required to amortize bonds payable using the effective-interest method. c. Public companies are required to amortize bonds payable using the effective-interest method O d. All of the listed answers are not true. 240132 Which of the following is TRUE? Select one: O a. When the carrying value of a bond is less than its retirement price, a gain on early debt retirement will be recorded O b. A convertible bond allows for a bond to be converted at a future date into shares of the issuer's common shares. O c. Interest payments to debtholders are not required to be paid if the company reports a net loss and subsequently no income O d. None of the listed answers are true No 2532 Which of the following statements is TRUE? Select one: O a Dividends and interest are both expenses related to corporate financing O b. The statement of changes in equity statement reports dividends declared, as well as all gains or losses on disposal of long-lived assets O c. Once a cash dividend is declared the corporation has a liability payable to its shareholders until the dividend is paid. O d. Stock dividends on common shares do not affect retained earnings. Not ] Insan 26.32 Assume the following share capital structure for Wolf Inc. - Preferred shares, 6%, $25 par value, cumulative, 2,000 shares outstanding, with dividends in arrears for the years 2018, 2019, and 2020. - Common shares, no par value, 2.000 shares outstanding, Total dividends declared in 2021 were $30,000. The total amount of dividends payable to common shareholders is Select one: O a. $30,000 O b. $27,000 O c. $21,000 O d. $18,000 27. of 32 The statement of earnings would not include Select one: O a. the effect on prior years of changes in accounting standards O b. the effect of non-operating transactions. O c. the effect of discontinued operations. O d. the effect of impairment of goodwill. Marks 28.132 Which of the following events decreases shareholders' equity? Select one: a Payment of a previously declared cash dividend. Ob. Declaration of a 5 percent stock dividend c. Declaration of a cash dividend for preferred shares. Od Declaration of a 2-for-1 stock split Notes Unsure M 29 132 Which of the following statements is not correct? Select one: O a Ownership of common shares gives the owner a voting right. O b. If a company's shares are sold by one shareholder to another, this transaction must be recorded by the company, and Share Capital would increase O c. The authorization of share capital does not result in a transaction that is recorded by the company O d. Legal capital cannot be distributed to shareholders. 30432 of 32 Which one of the following would normally be considered a disadvantage of the corporate form of organization? Select one: O a. Limited liability of shareholders O b. Separate legal existence O c. Continuous life O d. Government regulation 31 132 The following information is taken from the statement of financial position and related disclosures of Blue Bird Corporation: $5,400,000 Total contributed capital Outstanding shares: $1.50 preferred shares, no-par-value, callable at $25.50, issued at $25 per share Common shares, no-par-value Preferred dividends in arrears Total shareholders' equity 40,000 shares 100,000 shares two years $4,700,000 Which of the following statements is not correct? Select one: O a. The preferred dividends in arrears amount to $120,000 and should appear as a liability in the corporation's statement of financial position O b. The average issue price per common share is $44 O c. The shareholders' equity section of the statement of financial position should show a deficit of $700,000 O d. The corporation has not paid any dividends on common shares during the past two years. Note 320432 Which of the following transactions will cause an increase on both sides (left and right) of the basic accounting equation? Select one: O a Collection of cash from a customer who purchased merchandise on account O b. Payment to a supplier for inventory purchased on account. O c. Conversion of bonds to common shares. O d. Purchase of equipment for cash
