FAR1

C

"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

D

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 shares

B

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. Use the "with and without" method to measure the compound instrument D. All of the choices are correct

A

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 equity D. Deducted from equity, net of any related income tax benefit

C

If shares are issued for a noncash consideration, the shares issued shall be measured by A. Fair value of the shares issued B. Par value of the shares issued C. Fair value of the noncash consideration received D. Carrying amount of the noncash consideration received

D

Transaction costs that are directly attributable to the issuance of new shares should be A. Expensed immediately B. Charged to retained earnings C. Deducted from equity D. Deducted from equity, net of any related income tax benefit

C

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

C

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 B. May decrease but increase net income

C

At the date of the financial statements, shares issued would exceed 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

D

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

D

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 D. None of the above may be done

A

Gain and loss on retirement of treasury shares shall not be included in profit or loss. If the retirement results in gain such gain shall be credited to A. Share premium B. Retained earnings C. Share capital D. Income

B

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

B

How would a share split affect share premium and retained earnings, respectively? A. Increase and Increase B. No effect and No effect C. No effect and Decrease D. Increase and Decrease

B

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 liability extinguished D. Book value of the shares issued

C

The par value of an ordinary share represents A. The liquidation value 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

B

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 issue of shares of the same class C. Receive cash dividends before distribution to preference shareholders D. Exclude preference shareholders from voting rights

C

Total shareholders equity represents A. A claim against specific assets contributed by the owners B. The maximum amount that can be borrowed bu the entity C. A claim against a portion of the total assets of an entity D. Only the amount of retained earnings

D

Transaction costs that are 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

B

When an entity issued rights to existing shareholders to purchase unissued ordinary shares at more than par value, share premium would be recorded when the rights A. Lapsed B. Are exercised C. Become exercisable D. Are issued

C

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

B

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 considerations C. Carrying amount of the noncash consideration D. Cost of the treasury shares

C

In accounting for shareholders equity, the accountant is primarily concerned with which of the following? A.Determining the total amount of shareholders equity B. Distinguish 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

D

Loss on retirement of treasury shares shall be debited to A. Retained earnings B. Share premium from treasury shares and the retained earnings C. Share premium from treasury shares, share premium from original issuance, then retained earnings D. Share premium from original issuance, share premium from treasury shares and then retained earnings

C

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 corrected

B

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

A

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

C

The purchase of treasury shares A. Decrease shares authorized B. Decrease shares issued C. Decrease shares outstanding D. Has no effect on shares outstanding

C

The residual interest in a corporation belongs to A. Management B. Creditors C. Ordinary shareholders D. Preference shareholders

C

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 assets of the entity C. Bear the ultimate risks and receive the benefits of ownership D. Can negotiate individual contracts in behalf of the entity

D

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, net of tax benefit C.The joint costs should be deducted from equity, plus tax benefit D. The joint costs should be allocated between the newly issued and listed shares and the newly listed old existing shares prorata based on the number of shares outstanding

D

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

B

When collectibility 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 subscription is issued

B

When preference share are purchased and retired by the issuing entity for less than original issue price, proper accounting for the retirement A. Increases the amount of dividends available to ordinary B. Increases the contributed capital of the ordinary shareholders C. Increases reported income for the period D. Increases the treasury shares

B

When shares are issued in payment for 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

D

When shares with par value are sold, the proceeds shall be credited to the A. Share capital account 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

C

When shares with 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

D

When the total shareholders equity is smaller than the amount of contributed capital, the deficiency is called A. A net loss B. A dividend C. A liability D. A deficit

C

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

D

Which is true concerning share capital transactions? A. Deposits on subscription to a proposed increase in share capital should be reported as part of shareholders equity B. Subscriptions receivable from sale of share capital not currently collectible should be reflected as deduction from related subscribed share capital C. Discount on share capital should be shown as deduction from total shareholders equity D. All of these statements are true concerning share capital transactions

D

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

C

Which of the following statements 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 shareholders 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