Chapter 5 - Share Capital and Retained Earnings

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No entry is required on the ex-dividend date.

True

The liability for dividend is recorded at date of record.

False

The only source of share premium is the excess of consideration over par or stated value.

False

Total shareholders' equity represents a claim to specific assets contributed by the owners.

False

Treasury shares are assets of the corporation because the entry to record such involves a debit to treasury shares account and a credit to cash.

False

When a corporation issues no par value shares without stated value, it involves a credit to share capital and share premium.

False

When donated shares are retired, there is no effect in the corporation's equity.

False

When the corporation issues only one class of shares, it should be preference shares.

False

If the shares distributed are the entity's own shares, it is called as stock dividends.

True

Subscribers not declared as delinquent are entitled to receive cash dividends.

True

The corporation shall issue the stock certificate upon full payment of the subscriber.

True

The statement of Retained Earnings is not required per revised PAS 1.

True

Wasting asset corporations are allowed to include a return of capital as part of the dividends declared.

True

A share dividend does not affect the corporation's assets and liabilities.

True

Cash dividends are paid on the basis of outstanding shares.

True

Donated capital account is part of share premium.

True

Outstanding shares represent the largest number of common shares.

False

Reissuance of treasury shares cannot affect the balance of retained earnings.

False

Donated shares are accounted for the same way as donation of assets.

False

Donated shares are recorded at the fair value of the shares donated.

False

On the date of donation, the assets of the corporation increases in case of donated shares.

False

Dividend declaration is at the discretion of its stockholders.

False

If the method of accounting for share capital is not indicated, then assume the use of the Memorandum method.

True

For no-par shares, legal capital is the total consideration received by the corporation for the shares issued to its stockholders including the share premium or the excess of the issuance price over its stated value.

True

If income summary shows a debit excess, that represents the amount of net loss for the current reporting period.

True


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