ACCO CHAPTER 8 & 9 (T/F)
True
A corporation is a business owned by its shareholders.
True
A share capital dividend decreases retained earnings but it increases contributed capital
True
Additional paid-in capital for the excess of the stock subscription price over par or stated value is recorded at the time of subscription.
True
Appropriation of retained earnings is necessary when the corporation reacquires its own share capital.
False
Book value of share capital is a measurement of the amount of income earned for each share of stock.
False
Convertible preference shares allow the issuing corporation to redeem the shares.
False
The accounting cycle of a corporation is very much different from the accounting cycle of a partnership or a sole proprietorship.
True
The authorized shares represent the maximum number of shares that a corporation may issue.
False
The normal balance of Retained Earnings account is credit. There can never have a debit balance
True
Under the journal entry method, the amount of share capital issued isbdetermined by deducting the balance of unissued share capital account from the balance of authorized share capital account.
True
"Dividends in arrears" is a term that applies to cumulative preference shares.
False
A corporation, like a partnership, may be formed by the mere agreem of five or more persons.
True
A debit balance in the Retained Earnings account is called a deficit.
False
A deficit (or debit balance) in Retained Earnings means that appears in the asset section of the statement of financial position
True
A share capital dividend does not change total shareholders' equity.
False
A share capital dividend that has been declared but not yet distributed should be reported as a current liability.
True
A stock certificate is issued to the subscriber upon full payment of his subscription.
True
All incorporators are shareholders but not all shareholders incorporators
False
An appropriation of retained earnings reduces the total amount of retained earnings.
True
Generally, there are only two classes of authorized share capital preference share capital and the ordinary share capital
True
It is legal to issue share capital at par or at more than par but not at less than par.
True
On a corporation's statement of financial position, Ordinary Share Subscribed will appear in the shareholders' equity section rather than the asset section.
True
Organization (pre-operating) costs are expenditures associated with incorporating a new business. Such costs should be recognized as expense in the first year of operations.
False
Partnership net assets that are transferred to the corporation should be recorded in the new corporations' books at their book value.
True
The balance of the Income Summary account is transferred to the Retained Earnings account.
False
The highest bidder is the one who is willing to pay the entire unpaid subscription plus any expenses incurred in the delinquency sale and at the same time getting the highest number of shares.
False
The journal entry method may be used in recording authorized share capital and other stock transactions relating to a no-par and no stated value share capital.
True
The liability of the shareholders for corporate debts is limited to the amount of their investment.
False
The liquidation value of a preference share is always equal to its par value.
True
The management of a corporation is vested on a body called Board of Directors.
False
Unappropriated retained earnings represents amount of cash available for dividend distribution
False
Unissued shares represent the number of shares that may still be subscribed.
False
Share capital subscriptions in a corporation are payable only in cash
False
A corporation issues share capital on a subscription basis that is payable in three installments. Each time the corporation receives a payment, Share Capital account is credited.
True
A cumulative preference share capital is entitled to payment of dividends in arrears.
False
Dividends may be declared even if a corporation has a deficit.
True
When the memorandum entry method is used the account Share is credited upon issuance of stocks.
False
Book value per share is the amount earned for every capital share owned by a shareholder.
False
Both the partnership's owners and a corporation's owners have limited liability for business debts.
False
Earnings per share is computed for both preference and ordinary shares.
True
Property dividends should be recorded at the fair value of the assets distributed
True
Share capital that has been sold and issued to a shareholder is called an outstanding share capital.
True
The owners of a stock corporation are called shareholders, the owners non-stock corporation are called members.
False
When a partnership is incorporated, a new set of books should always be opened for the new corporation.
False
When share capital is issued for consideration in the form of property other than cash, the net book value of the property is used to record the transaction