Quiz 1 (ITB)

The two primary account classifications within shareholders’ equity are

• Preference shares and retained earnings

• Ordinary shares and retained earnings

• Contributed capital and retained earnings

• Preference shares and ordinary shares

Contributed capital does not include

• Share premium

• Preference share capital

• Ordinary share capital

• Treasury shares

Shareholders of an entity are said to be residual owners which means that shareholders

• Are entitled to a dividend every year in which the entity earns a profit

• Have the right to specific assets of the business

• Bear the ultimate risks and uncertainties and receive the benefits of ownership

• Can negotiate individual contracts on behalf of the entity

Which is not a basic right of a shareholder?

• The right to participate in earnings.

• The right to vote in the election of directors and in the determination of policies.

• The right to share in the net assets of the corporation upon liquidation

• The right to inspect the accounting records of the corporation.

The preemptive right of an ordinary shareholder is the right to

  

• Share proportionately in corporate assets upon liquidation.

• Share proportionately in any new issue of shares of the same class.

• Receive cash dividends before they are distributed to preference shareholders.

• Exclude preference shareholders from voting rights.

Which of the following represents the total number of shares that a corporation may issue under the terms of its charter?

•   Authorized shares

• Issued shares

•   Unissued shares

• Treasury shares

Outstanding shares are

• Shares that are performing well in the public market

• Shares that have been authorized for issue

• Shares held in the corporate treasury

• Shares in the hands of shareholders

Shares that have a fixed per-share amount printed on each share certificate are called 

• Stated value shares

• Fixed value shares

• Uniform value shares

• Par value shares

When collectibility is reasonably assured, the excess of the subscription price over the stated value of the no par share capital subscribed should be recorded as   

•   No par share capital

• Share premium when the subscription is recorded

• Share premium when the subscription is collected.

• Share premium when the shares are issued.

Treasury shares are

• Shares held as an investment by the treasurer of the corporation.

• Shares held as an investment of the corporation.

• Issued and outstanding shares.

• Issued but not outstanding shares.