Which of the following statements regarding dividends in arrears is false? a. Total dividends in arrears is one year dividend requirement on cumulative preference share capital multiplied by the number of years in arrears. b. Dividends in arrears may arise on both preference and ordinary share capital in any year

Which of the following statements regarding dividends in arrears is false? a. Total dividends in arrears is one year dividend requirement on cumulative preference share capital multiplied by the number of years in arrears. b. Dividends in arrears may arise on both preference and ordinary share capital in any year

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter5: Corporations: Earnings & Profits And Dividend Distributions

Section: Chapter Questions

Problem 4BCRQ

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Which of the following statements regarding dividends in arrears is false? Question options: a Total dividends in arrears is one year dividend requirement on cumulative preference share capital multiplied by the number of years in arrears. b Dividends in arrears may arise on both preference and ordinary share capital in any year the dividends are not paid. c Dividends in arrears are not a liability to a corporation until they are declared. d Dividends in arrears must be reported in the footnotes to the financial statements.
If a corporation fails to declare a dividend on cumulative preferred stock in a given year, the dividends in arrears accumulate from period to period. the dividends in arrears are recorded as liabilities. the common shareholders may still receive dividends in the current year. all of these options apply.
Which one of the following statements apply only to preference shareholders and not to equity shareholders a. Shareholders risk the loss of investment b. Shareholders bear the risk of no dividends in the event of losses c. Shareholders usually have the right to vote d. Dividends are usually given at a set amount in every financial year
The cumulative feature of preference share limits the amount of cumulative dividends to the par value of the preference share requires that dividends not paid in any year must be made up in a later year before dividends are distributed to ordinary shareholders means that the shareholder can accumulate preference share until it is equal to the par value of ordinary share at which time it can be converted into ordinary share. enables a preference stockholder to accumulated dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.
A company has cumulative preferred stock. When computing earnings per share, the current year's dividends not declared on the preferred stock should be: A. Deducted from earnings for the year. B. Deducted, net of tax effect, from earnings for the year. C. Added to earnings for the year. D. Ignored.
Which of the following is not correct relative to an appropriation of Retained Earnings? Question options: a Retained earnings set aside for a special or specific purpose. b Undistributed funds for dividends declared during the year. c Reduction in the amount available to shareholders as dividends d Total retained earnings remains unchanged.
1. The pre-emptive right of a common stockholder is the right to Choices; share proportionately in corporate assets upon liquidation. share proportionately in any new issues of stock of the same class. receive cash dividends before they are distributed to preferred stockholders. exclude preferred stockholders from voting rights. 2. In computing diluted earnings per share, interest expense on convertible bond payable should be Choices ignored Added back to net income net of tax Added back to net income at gross Deducted from net income net of tax Clear selection
A company has not declared a dividend on its cumulative preference shares for the past three years. What is the required accounting treatment or disclosure in this situation? Select one: Disclose the amount of the dividends in arrears. Record a liability for cumulative amount of preference shares dividends not declared. No disclosure or recognition is required. Record a liability for the current year's dividends only.
Discuss the accounting treatment, if any, that should be given to each of the following items in computing earnings per share of ordinary shares for financial statement reporting. a) Outstanding preference shares issued at a premium with a par value liquidation right. b) The exercise at a price below market value but above book value of an ordinary share option issued during the current fiscal year to officers of the corporation. c) The replacement of a machine immediately prior to the close of the current fiscal year at a cost 20% above the original cost of the replaced machine. The new machine will perform the same function as the old machine that was sold for its book value. d) The declaration of current dividends on cumulative preference shares. e) The acquisition of some of the corporation's outstanding ordinary shares during the current fiscal year. The shares were classified as treasury shares. f) A 2-for-1 share split of ordinary shares during the current fiscal year. g) A…
Which of the following is FALSE regarding features of common stock? Dividends are paid from a company's after-tax earnings Common stockholders are the residual claimants, meaning that if the company is liquidated the common stockholders are last in line to get any payment. Some companies have two classes of stock, with the company's founders holding shares that get 10 votes per share and the investing public holding shares that get 1 vote per share common stock pays a fixed dividend that continues indefinitely common stockholders elect the board of directors.
Which of the following statements regarding earnings per share is false? It is reported on the income statement. It increases when net income increases. It is calculated using the average number of common shares outstanding during the period. It would not be affected by additional shares of common stock issued during the year.
Stock dividends and stock splits are similar in that both do not change total stockholders’ equity. (True/False) A company must accrue a liability for sick pay that accumulates but does not vest. (True/False) A company may exclude a short-term obligation from current liabilities if the firm can demonstrate an ability to complete a refinancing. (True/False) Federal income taxes should be included in an employer’s payroll tax expense. (True/False) Whether an employee earns $80,000 a year or $800,000 a year, all of the earnings will be subject to Medicare deductions. (True/False) To record compensated absences as a liability GAAP establishes four criteria. The employer needs to meet any two of these four criteria in order to recognize a liability for compensated absences. (True/False) Stock dividends and stock splits both cause the number of shares outstanding to increase and retained earnings to decrease. (True/False)