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2ND YEAR (FIRST SEM) > INTERMEDIATE ACCT. (RETAINED EARN. - TOA) > Flashcards

INTERMEDIATE ACCT. (RETAINED EARN. - TOA) Flashcards

1
Q

Retained earnings represent

a. Earned capital

b. Cash

c. Assets

d. Net assets

A

A

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2
Q

Retained earnings represent

a. Undistributed net income

b. Undistributed net assets

c. Extra contributed capital

d. Undistributed cash

A

A

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3
Q

The total retained earnings balance is not affected by

a. Net income

b. A prior period error

c. Dividends paid

d. Restrictions

A

D

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4
Q

When a property dividend is declared, the dividend payable is measured based on fair value of property on

a. Record date

b. Distribution date

c. Declaration date, reporting date and distribution date

d. Reporting date

A

C

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5
Q

The declaration and issuance of a share dividend

a. Has no effect on assets, liabilities and total shareholders’ equity.

b. Decreases total shareholders’ equity

c. Decreases assets and total shareholders’ equity.

d. Does not change retained earnings

A

A

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6
Q

Nonshare dividend is recognized as liability on the

a. Date of declaration

b. Date of record

C. Date of payment.

d. Date of issuing check

A

A

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7
Q

When shareholders may receive cash in lieu of share dividend, the amount charged to retained earnings is equal to

a. Optional cash dividend

b. Fair value of the shares

c. Par value of the shares

d. Book value of the shares

A

A

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8
Q

Treasury shares may be reissued as dividends, in which case what amount shall be charged to retained earnings?

a. Cost of treasury shares

b. Par value of treasury shares

c. Fair value of treasury shares on the date of declaration

d. Fair value of treasury shares on the date of issuance

A

A

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9
Q

If the share dividend is less than 20%, how much of the retained earnings shall be capitalized?

a. Par value of the shares

b. Fair value of the shares on the date of declaration

c. Fair value of the shares on the date of record

d. Fair value of the shares on the date of issuance

A

B

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10
Q

At what amount should retained earnings be reduced if the share dividend is 20% or more?

a. Zero

b. Par value

c. Market value at the declaration

d. Market value at the date of issuance

A

B

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11
Q

An entity declared a cash dividend on a certain date, payable on another date. Retained earnings would

a. Increase on the date of declaration

b. Not be affected on the date of declaration

c. Not be affected on the date of payment

d. Decrease on the date of payment

A

C

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12
Q

The actual total amount of a cash dividend to be paid is determined on the date of

a. Record

b. Declaration

c. Declaration or record, whichever is earlier

d. Payment

A

A

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13
Q

A dividend which is a return to shareholders of a portion of their original investment is

a. Liquidating dividend

b. Patronage dividend

c. Liability dividend

d. Participating dividend

A

A

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14
Q

Total shareholders’ equity is not affected by the

a. Issuance of a share dividend

b. Conversion of bonds payable into share capital

c. Sale of treasury shares at more than cost

d. Declaration of a cash dividend

A

A

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15
Q

How would the declaration and subsequent issuance of a 10% share dividend affect share capital and share premium, respectively, when the fair value of the shares exceeds par value?

a. No effect and No effect

b. No effect and Increase

c. Increase and No effect

d. Increase and Increase

A

D

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16
Q

An entity declared a dividend, a portion of which was liquidating. How would this declaration affect contributed capital and retained earnings, respectively?

a. Decrease and No effect

b. Decrease and Decrease

c. No effect and Decrease

d. No effect and No effect

A

B

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17
Q

How would the declaration of a liquidating dividend affect contributed capital and retained earnings, respectively?

a. No effect and Decrease

b. Decrease and No effect

c. No effect and No effect

d. Decrease and Decrease

A

B

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18
Q

The issuer shall directly charge retained earnings for the fair value of the shares issued in

a. Two for one share split

b. Share options

c. Ten percent share dividend

d. Share appreciation right

A

C

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19
Q

The issuer shall directly charge retained earnings for the par value of shares issued in

a. 1 for 5 share dividend

b. 1 for 8 share dividend

C. 4 for 1 share split

d. 2 for 1 share split

A

A

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20
Q

A transfer from retained earnings to share capital equal to the fair value of the shares issued is ordinarily a characteristic of

a. Either a share dividend or share split

b. Neither a share dividend nor share split

c. Share split but not a share dividend

d. Share anvidend but not a share split

A

D

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21
Q

An entry is not made on the

a. Date of declaration

b. Date of record

c. Date of payment

d. An entry is made on all of these dates

A

B

22
Q

Cash dividends are paid based on the number of shares

a. Authorized

b. Issued

c. Outstanding

d. Outstanding less the number of treasury shares

A

C

23
Q

Undistributed share dividends shall be reported as

a. A current liability.

b. An addition to share capital outstanding.

c. A reduction in total shareholders’ equity.

d. A note to the financial statements.

A

B

24
Q

Which of the following would not affect retained earnings?

a. Conversion of preference share into ordinary share

b. Share split

c. Treasury share transaction

d. Share dividend

A

B

25
Q

How would retained earnings be affected by the declaration of share dividend and share split respectively?

a. Decrease and Decrease

b. No effect and Decrease

c. No effect and No effect

d. Decrease and No effect

A

D

26
Q

Which statement about property dividend is not true?

a. A property dividend is usually in the form of securities of other entities.onet

b. A property dividend is also called a dividend in kind.

c. The accounting for a property dividend is based on the carrying amount of the noncash asset.

d. All of these statements are true.

A

C

27
Q

Which is a capitalization of retained earnings?

a. Cash dividend

b. Share dividend

c. Property dividend

d. Liquidating dividend

A

B

28
Q

Liquidating dividends

a. Are prohibited under IFRS

b. Require a credit to share capital

c. Reduce amounts paid in by shareholders

d. All of the choices are correct

A

C

29
Q

A share dividend requires a formal journal entry because the share dividend

a. Increases the book value of a share.

b. Increases shareholders’ equity.

c. Is a liability on the date of declaration.

d. Represents a transfer from retained earnings to share capital.

A

D

30
Q

When a share dividend is declared

a Total shareholders’ equity does not change.

b. Total shareholders’ equity decreases.

c. The current ratio increases.

d. The amount of working capital decreases.

A

A

31
Q

An entity shall measure a liability to distribute noncash asset as dividend to the owners at

a. Carrying amount of the asset distributed

b. Fair value of the asset distributed

c. Either the carrying amount or fair value of the asset

d. Neither the carrying amount nor fair value

A

B

32
Q

An entity shall review and adjust the carrying amount of the dividend payable at the end of each reporting period and at the date of settlement with any changes in the carrying amount of the dividend payable recognized

a. In equity as adjustment to the amount of distribution

b. In profit or loss

c. As adjustment of share premium

d. As component of other comprehensive income

A

A

33
Q

When an entity settles the property dividend payable, it shall recognize the difference between the carrying amount of the asset distributed and the carrying amount of the dividend payable as

a. Gain or loss on distribution of property dividend

b. Other comprehensive income

c. Equity

d. Retained earnings

A

A

34
Q

An entity shall measure a noncurrent asset classified as held for distribution to owners at

a. Carrying amount

b. Fair value less cost to distribute

c. Lower between carrying amount and fair value less cost to distribute

d. Fair value

A

C

35
Q

If the fair value less cost to distribute is lower than carrying amount of the asset at the end of period, the difference is accounted for as reporting

a. Impairment loss

b. Gain on property dividend

c. Adjustment of retained earnings

d. Adjustment of dividend payable

A

A

36
Q

A retained earnings appropriation is used to

a. Absorb a fire loss when an entity is self-insured

b. Provide for probable and measurable contingent loss

c. Smooth periodic income

d. Restrict earnings available for dividends

A

D

37
Q

An appropriation of retained earnings for future plant expansion will result in

a. The establishment of a fund to finance plant expansion.

b. The setting aside of cash for future plant expansion.

c. A decrease in cash with an equal increase in fund.

d. The disclosure that management does not intend to distribute dividends equal to the appropriation.

A

D

38
Q

A restriction of retained earnings is required by

a. Purchase of property, plant and equipment

b. Purchase of treasury shares

c. Payment of last maturing series of a serial bond issue

d. Funding of past service cost

A

B

39
Q

Retained earnings appropriated account is created for the purpose of

a Earmarking cash to be used for particular purposes

b. Insuring the payment of dividends

c. Protecting the working capital position

d. Preventing losses from contingencies

A

C

40
Q

Which is incorrect concerning appropriations of retained earnings?

a. Appropriations of retained earnings do not change the total amount of shareholders’ equity.

b. Appropriations of retained earnings reflect funds set aside for a designated purpose, such as plant expansion.

c. Appropriations of retained earnings can be made as a result of contractual requirements.

d. Appropriations of retained earnings can be made at the discretion of the board of directors

A

B

41
Q

For which purpose should an appropriation for possible loss contingencies be established?

a. To match applicable costs with current revenue.

b. To reduce fluctuations in net income.

c. To charge operations in periods of rising prices.

d. To inform shareholders that a portion of retained earnings is not available for dividends.

A

D

42
Q

Which statement is not true about appropriation?

a. Appropriations do not reduce, total retained earnings.

b. The only proper way to eliminate an appropriation is to revert to the unappropriated retained earnings.

c. Retained earnings must be appropriated equal to the par value of the treasury shares.

d. An appropriation does not mean that asset is segregated for a specific purpose.p

A

C

43
Q

Which is true regarding payment of dividends?

a. Dividends may be paid from legal capital.

b. Retained earnings are available for dividends unless restricted by contract or by statute.

c. Legal capital is available for any type of dividend.

d. Capital from donated asset is available for dividends.

A

B

44
Q

Whichis not a legal restriction to income distribution?

a. The amount distributed must be in compliance with law

b. The amount distributed can never exceed the net income for the current year

c. Income distribution must be approved by board of directors

d. Dividends must be in agreement with preferences.

A

B

45
Q

Whichis not a legal restriction to income distribution?

a. The amount distributed must be in compliance with law

b. The amount distributed can never exceed the net income for the current year

c. Income distribution must be approved by board of directors

d. Dividends must be in agreement with preferences.

A

B

46
Q

The use of equity reserves under IFRS

a. Is strictly voluntary on the part of the management. b. Is based on whether a reserve is part of distributable or

nondistributable equity. c. Is primarily for the benefit of shareholders.

d. Results in the elimination of retained earnings.

A

B

47
Q

The primary purpose of quasi-reorganization is to give an entity the opportunity to

a Obtain relief from creditors

b. Revalue understated assets to to fair value ‘YAHO

c. Eliminate a deficit in retained earnings

d. Form a new corporation

A

C

48
Q

When an entity goes through a quasi reorganization the carrying amounts are stated at

a. Original cost

b. Replacement cost

c. Fair value

d. Original carrying amount

A

C

49
Q

Immediately after a quasi-reorganization, the retained earnings account

a. Has a zero balance

b. Remains the same

c. Frozen and dated

d. Has a debit balance

A

A

50
Q

The accounting for a quasi-reorganization usually includes

a. Writeup of assets and writedown of retained earnings

. Writedown of both assets and retained earnings b c. Writedown of assets and elimination of a deficit

d. Writeup of assets and elimination of a deficit

A

C

51
Q

An entity undertakes a quasi-reorganization. Certain assets will be written down to fair value. Liabilities will remain the same. How would the quasi-reorganization affect share capital and retained earnings, respectively?

a. Increase and Decrease

b. Decrease and No effect

c. Decrease and Increase

d. No effect and Increase

A

C

2ND YEAR (FIRST SEM) (11 decks)

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