Final Exam - Accounting 2

In 2015, Leung, Inc. issued P10 par value ordinary shares for P25 per share. No other ordinary shares transactions occurred until March 31, 2017, when Leung acquired some of the issued shares for P20 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?

• Retained earnings is increased

• Year 2017 profit increased

• Year 2017 profit is decreased

• Share premium is decreased

If Win corporation has 80,000 ordinary shares authorized, has 50,000 ordinary shares issued, and holds 4,000 ordinary shares as treasury stock, the total number of outstanding shares of Win Corporation amounts to

• 30,000

• 76,000

• 34,000

• 46,000

A share of treasury stock that was acquired for 4,000 was sold to a new shareholder for 6,000. In recording this transaction.

• ordinary shares would be credited for 4,000

• treasury stock would be credited for 6,000

• share premium treasury would be credited for 2,000

• share premium treasury would be credited for 6,000

The contributed capital of a corporation does not include

• the stated value of ordinary shares issued

• retained earnings

• share premium

• preference share

Evangelista Corp. paid a lawyer 5,000 to prepare its articles of incorporation. In recording this transaction, the corporation should debit

• ordinary shares

• treasury stock

• donated capital

• organizational expense

The issuance of preference share to shareholders

• has no effect on preference share outstanding

• decreased preference share authorized

• increased preference share authorized

• increases preference share outstanding

Digao Corporation declared the regular quarterly dividend of P2 per share. Digao had issued 12,000 shares and subsequently reaquired 2,000 shares a treasury stock. What would be the total amount of the dividend?

• P24,000

• P20,000

• P28,000

• P4,000

Legal capital is a descriptive phrases for

• shareholder' equity

• residual equity

• Market value

• par value

Shares of treasury stock are

• unissued shares that are held by the treasurer of the corporation

• issued shares that have been bought back by the corporation and are being held by the corporation

• part of the total outstanding shares but not part of the total issued shares of corporation

• shares hold by the Bureau of Treasury

The amount of the shareholders' investments is called

• paid-in capital

• outstanding share

• retained earnings

• total shareholders' equity