How would the declaration and subsequent issuance of a small stock dividend affect share capital and share premium when the fair value of the shares is equal to the par value? No effect on share capital and increase share premium Increase share capital and no effect on share premium Increase both share capital and share premium No effect on both share capital and share premium

How would the declaration and subsequent issuance of a small stock dividend affect share capital and share premium when the fair value of the shares is equal to the par value? No effect on share capital and increase share premium Increase share capital and no effect on share premium Increase both share capital and share premium No effect on both share capital and share premium

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 14MC: Which of the following is true of a stock dividend? A. It is a liability. B. The decision to issue a...

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Which of the following is not a characteristic that sets preferred stock apart from common stock? A. voting rights B. dividend payments C. transferability D. ownership
What is the difference between a stock dividend and a stock split? As a stockholder, would you prefer to see your company declare a 100% stock dividend or a 2-for-1 split? Assume that either action is feasible.
Which of the following statement is false in regards to Share premium? a. It will be shown under equity section in the balance sheet b. It will be credited at the time of issue of new shares along with premium c. It cannot be distributed as dividend to the shareholders d. It can be distributed as dividend to the shareholders
Which of the following is False in regards to Share premium account? a. It will be shown under the shareholders equity b. It will be collected when the issue price is more than the par value of shares c. It will be collected when the par value of share is more than the issue price d. It will not be shown under current assets in the balance sheeting
1.Which statement is incorrect? * a. On repurchase of treasury shares, no gain or loss is recognized. The purchase price would become the cost of treasury shares. b. On reissuance of treasury shares, the difference between the cost and reissue price of treasury shares is debited or credited to share premium rather than to profit or loss. c. If treasury shares are retired above par, the difference between the cost and the par value is automatically charged to retained earnings. d. Treasury shares can be subjected to share split and can be re-issued as share dividends. e. none of the above 2. Which statement is incorrect? a. Dividends out of retained earnings is limited to the balance of unappropriated retained earnings, except for share dividends. b. Cash dividends are paid on the basis of the number of shares issued less the number of treasury shares. c. Property dividends payable shall be measured based on fair value of the property on the date of declaration, reporting and…
If a preferred stock is of the cumulative type, a. dividends cannot be passed if they are earned. b. unpaid dividends of one period must be carried forward and paid in subsequent periods before anything can be paid to common stockholders. c. dividends must be paid, and if not a liability is created. d.dividends must be paid on an equal basis with common stock, so long as earnings permit.
Which of the following statements is true in relation to the call price of preference shares? The call price is used in computing book value per share. In the absence of call price, the liquidation value is disregarded and the par or stated value is instead used. The call price is the amount paid to preference shareholders upon redemption of preference shares during the lifetime of the entity. All of these statements are true.
Which of the following does not affect accumulated profits? A. Stock dividendB. Share splitC. Conversion of preference share to ordinary shareD. Treasury share transaction
Which of the following statements is not true about preferred stock? A.The rate of dividend is usually fixed B.Stockholders' usually have a preference as to dividends C. Stockholders always have a voting right D. Stockholders' usually have a preference as to assets upon liquidation of the corporation
When non-par value shares are reacquired at a cost greater than their average issue price and cancelled, what account(s) should be debited? Select one: a. The share account for the total cost. b. The share account for the average issue price, contributed surplus-repurchases up to its account balance, other contributed surplus relating to this class of shares in proportion to the number of shares repurchased versus outstanding and lastly retained earnings for any remaining amount. c. The share account for the average per share amount, retained earnings for the additional amount, and lastly contributed surplus for any remaining amount. d. The share account for the average per share amount and a loss account for the additional amount. e. none of the above answers are correct.
Which of the following statements is incorrect? Issued shares of stocks include those that have been at one time been sold to the public and which have been subsequently retired. If an entity’s capital stock is retired, the Share Capital account is reduced by its par value, the number of shares is reduced by the stock retired and the treasury stock is credited at cost. Treasury shares may be reissued as dividends, in which case the cost of the shares should be charged to Retained Earnings. Though may be used in computing for the Share Capital, stated value is not similar to par value of stock.
The issuance of preference shares ? Increases preference shares outstanding. Has no effect on preference shares outstanding. Increases authorized preference share capital Decreases authorized preference share capital