Review SHE

Share capital represents the total market value of a company's outstanding shares of stock.

• TRUE

• FALSE

If no bidder exists at the auction, the delinquent shares are converted to treasury shares.

• TRUE

• FALSE

Issuing a share certificate for subscribed shares does not affect Total Shareholders' Equity.

• TRUE

• FALSE

Accumulated profits can only be used for reinvestment in the business and cannot be distributed to shareholders.

• TRUE

• FALSE

Subscribing to shares of ordinary shares without payment received increases the equity capital contributed by shareholders, thus increasing Shareholders' Equity.

• TRUE

• FALSE

Which of the following is NOT considered contributed capital?

• Investment of shareholders when purchasing ordinary shares

• Share dividend distributable

• Profits accumulated over time

• Additional non-cash contributions from shareholders beyond the par value of share

A company repurchases some of its own common stock at a price above par value. How does this likely affect legal capital?

• It increases legal capital.

• It decreases legal capital.

• It has no effect on legal capital.

• The effect depends on the company's accounting policies.

What is the purpose of “issued shares" in a corporation's capital structure?

• They represent shares held by external investors.

• They represent shares that are available for future issuance.

• They represent shares that are held by company executives.

• They represent shares that have been sold and are held by shareholders.

What happens to a corporation when its shareholders sell their shares?

• It ceases to exist.

• It continues to exist.

• It becomes a sole proprietorship.

• It merges with another corporation.

Which of the following decreases equity on the Statement of Changes in Shareholders’ Equity?

• Issuance of ordinary shares

• Net loss for the year

• Payment of dividends

• Collection of subscribed shares