FAR2 Quiz On Corp

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6.

Linmers Corporation’s has authorized to issue 700,000 ordinary shares and


300,000 shares are issued and outstanding at December 31, 2020. The following
events occurred during 2020:
January 1 – Board of Directors declared 10% Share Dividend
Feb. 15 - Record date for the 10% share dividend
March 15 - Payment date for the 10% share dividend
March 30 - Purchased 100,000 shares
April 1 - Reissued 50,000 shares
May 15 – Declared 2-for-1 share split
June 30 - Record date for the share split up
Oct 31 - Distribution date for the share split up

How many issued and outstanding shares did the corporation have on December
31, 2021?
(2/2 Points)
280,000
560,000
720,000
1,440,000
7.Dalia Corporation received a subscription for 1,600 Preference shares with P300
par value at P308 per share. During the period, it issued 2,100 Preference shares
at P330 per share. On the same month, it received a subscription for 1,000
Preference shares at par and then received full payment from the subscribers. If
the corporation was authorized to issue 6,000 Preference shares, how many
shares are still available to be issued?
(2/2 Points)
2,300
4,400
3,100
1,300
8.A corporation’s residual equity is it
(1/1 Points)
Preference shares
Ordinary and preference shares
Ordinary shares
Creditors
9.The following information pertained to Hillary Corporation:
Dividends on its 1,000 shares of 6%, P10 par value cumulative preference shares
have not been declared for three years.
Treasury stock that cost P15,000 was reissued for P8,000
What amount of retained earnings should be appropriated as a result of these
items?
(0/2 Points)
P 600
P 710,000
P 1,800
P0
10.The corporation issued a 20% share dividend on its share capital. At what
amount should retained earnings be reduced for this transaction?
(1/1 Points)
Zero because no effect in the total stockholders’ equity
Fair value at the declaration date
Par value
11.The issuance of shares of ordinary share capital
(1/1 Points)
Decreases ordinary share capital authorized
Increases ordinary share capital authorized
Increases ordinary share capital outstanding
Decreases ordinary share capital outstanding
12.Preference share that is given a right to share with the ordinary share in
dividends in a stated dividend rate is said to be
(1/1 Points)
Cumulative
Non-cumulative
Non-participating
Participating
13.Malaya Corporation received a subscription for 1,600 Preference shares with
P300 par value at P308 per share. During the period, it issued 2,100 Preference
shares at P330 per share. On the same month, it received a subscription for 1,000
Preference shares at par and then received full payment from the subscribers. If
the corporation was authorized to issue 6,000 Preference shares, what is the
balance of the Preference Share capital?
(2/2 Points)
P1,410,000
P690,000
P1,320,000
P1,530,000
14.18. Xela Corporation was incorporated on Jan. 2, 2019. The following
information pertains to Xela's ordinary share transactions during the year.
Jan 1 Number of shares authorized 80,000
Mar. 1 Number of shares issued 60,000
April 1 Number of shares subscribed 10,000
June 1 Number of shares reacquired but not cancelled 5,000
Dec. 1 Two-for-one share split

What is the number of XYZ Corporation’s ordinary share issued and outstanding
on December 31, 2019?
(0/3 Points)
130,000
Correct answers: 110,000
15.Maya Corporation has a total shareholders’ equity of P1,000,000, including
retained earnings of P175,000. The cash balance is P350,000. How much is the
maximum amount of cash dividend that the corporation can declare and pay?
(0/2 Points)
P 175,000
P 1,000,000
P 350,000
P 525,000
16.When ordinary shares are sold on subscription basis and the entire
subscription price has been collected, the issuance of the share is recorded by
(1/1 Points)
A debit to Ordinary Shares and a credit to Subscription Receivable
A debit to Subscribed ordinary shares and a credit to Ordinary shares
A debit to Subscription receivable and a credit to Subscribed ordinary shares
A debit to Cash and a credit to Ordinary Shares
17.28. Rey Corporation had 80,000 ordinary shares outstanding in January 2020.
The corporation distributed a 15% share dividend in March, 2020 and a 10%
share dividend in June, 2020. After acquiring 10,000 shares of treasury stock in
July, 2020, the corporation split its share 3-for-1 in December. How many
ordinary shares are issued and outstanding as at December 31, 2020?
(2/2 Points)
182,400
225,000
260,000
273,600
18.The Dec. 31, 2020 condensed statement of financial position of Abby
Company, a sole proprietorship follows:
Current Assets P2,800,000
Equipment, net 1,600,000
Total Assets P4,400,000

Liabilities P 1,400,000
Abby, Capital 3,000,000
Total Liabilities and Capital P 4,400,000

Fair market values at December 31, 2020 are as follows:


Current Assets P3,200,000
Equipment 4,200,000
Liabilities P 1,400,000
On January 2, 2021, Abby Company was incorporated, with 10,000 shares of P100
par value ordinary shares issued. How much is the amount credited to Ordinary
Share Premium
(2/2 Points)
P 4,000,000
P 6,000,000
P 5,000,000
P 7,400,000
19.Dondie Corporation declared the regular quarterly dividend of P2 per share. It
had issued 12,000 shares and subsequently reacquired 2,000 shares as treasury
stock. What would be the amount of the dividend?
(2/2 Points)
P4,000
P80,000
P20,000
P24,000
20.On December 1, 2018, DVT Corporation received a donation of 2,000 shares of
its P50 par value ordinary shares from a shareholder. On that date, the share’s
market value was P350 per share. The stock was originally issued for P250 per
share. By what amount would this donation cause total shareholders’ equity to
decrease?
(2/2 Points)
P0
P400,000
P500,000
P700,000
21.Loida Corporation has authorized ordinary shares of 1,000,000 at P1 par value.
It issued 400,000 ordinary shares when it began operations on Jan. 1, 2019, and
subsequently issued an additional 200,000 shares during the year. It also issued
preference shares convertible to 200,000 ordinary shares. In 2019, it purchased
150,000 shares of its ordinary shares and held them in treasury. How many
outstanding ordinary shares at December 31, 2019?
(2/2 Points)
P400,000
P450,000
P600,000
P650,000
22.When the total shareholders’ equity is smaller than the amount of contributed
capital, then there is
(1/1 Points)
a net loss
a dividend declared
a deficit
a liability
23.Gumamela Corporation was authorized to issue 12,000 Ordinary shares at P80
par value. Upon the issuance of 3,000 shares at P100 per share and 3,150 shares
at P125 per share, how much is the Ordinary share capital?
(2/2 Points)
P316,250
P492,000
P508,000
P600,000
24.The contributed capital of a corporation does not include
(1/1 Points)
Share premium
Preference share
Retained earnings
The stated value of ordinary share issued
25.How would a share slit affect each of the following?
(1/1 Points)
Asset and Shareholders’ Equity will not change
Asset will increase and Shareholders’ Equity will not change
Asset will not change and Shareholders’ Equity will increase
Asset and Shareholders’ Equity will increase
26.For an entity that has only ordinary shares outstanding, total shareholders’
equity divided by the number of shares represents
(1/1 Points)
Book value per share
Return on equity
Earnings per share
Liquidation value per share
27.As of Dec. 31, 2020, Carlo Corporation has 10% Preference shares (cumulative
and participating) with outstanding shares of 6,000, P100 par; Ordinary shares of
10,000 with P40 par value and retained earnings of P800,000. Dividends were in
arrears for 2 years at the start of 2020. Dividends declared for 2020 amounted to
P400,000. How much are the dividends per share on Preference share at the end
of 2020?
(2/2 Points)
P25
P11.20
P66.67
P48
28.The following accounts are shown on the financial position of GAY
Corporation:
Ordinary Share capital, P100 par value 100,000
Share premium - ordinary 2,000
Retained earnings 75,000
Treasury shares, 200 shares at cost 25,000
All the 200 treasury shares were sold for P20,000.

How much would be the retained earnings?


(3/3 Points)
70,000.00

29.The following information was taken from the accounts of JET Corp at year
end:
Total income since incorporation P900,000
Total cash dividends paid 260,000
Proceeds from sale of donated shares 90,000
Total value of share dividends distributed 60,000
Excess of proceeds over cost of treasury stocks sold 140,000

What should be the current balance of retained earnings?


(3/3 Points)
580,000.00

30.Honest Corporation has 9%, P20 par Preference, and P70 par Ordinary. During
the year 2020, the corporation had the following equity transactions in
chronological order:
Particular No. of Shares Price per share
Issue of preference share 10,000 28
Issue of Ordinary share value 35,000 70
Reacquisition and retirement oi preference 2,000 30
Purchase of treasury ordinary share 5,000 80
Share split 2-for-1
Reissue of treasury ordinary share 5,000 52

Balances of the accounts in the stockholders’ equity section of the Dec. 31, 2019
statement of financial position were:
Preference Share, 50,000 shares 1,000,000
Ordinary share, 100,000 shares 7,000,000
Share premium – preference 400,000
Share premium – ordinary 1,200,000
Retained earnings 550,000
Dividends were paid at the end of the year on ordinary shares at P1.20 per share
and on the preference at the preference rate. Profit for the year was P850,000.
How much should be the amount of Preference share capital be shown in the
Dec. 31, 2018 statement of financial position?
(2/2 Points)
P1,140,000
P1,116,000
P1,160,000
P1,220,000
31.Which of the following may appear as separate items in a statement of
changes in equity?
I. Dividends on equity shares paid during the period
II. Loss on sale of investments
III. Proceeds of an issue of ordinary shares
IV. Dividends proposed after the year-end
(1/1 Points)
I, II, III and IV
I, III and IV only
I and III only
I, II and IV only
32.The corporation listed in the Philippine Stock Exchange declared a cash
dividend of P1.00 per share on May 1, 2021. The record date and payment date
will be on June 30, 2021 and August 1, 2021, respectively. Assuming that Mr. Cruz
bought shares of stock on record date, is he entitled to cash dividend on
payment date?
(0/1 Points)
yes
no
either yes or no
cannot be determined
33.The stated value of the share of stock is found in the corporation’s
(1/1 Points)
Articles of Incorporation
Articles of Incorporation and Stock Certificate
Stock Certificate
Neither Articles of Incorporation nor Stock Certificate
34.On December 29, 2019, Red Corp was registered at the SEC with 100,000
authorized ordinary shares of P100 par value. The following were Red's
transactions:
December 29, 2019 - Issued 40,000 shares at P105 per share.
May 14, 2020- Purchased 600 of its ordinary shares at P110 per share.
August 9, 2020- Treasury shares of 400 were sold at P95 per share.
December 31, 2020 - Profit earned is P830,000, and cash dividends paid
P200,000.
What is the total shareholder's equity of Red Corp. on December 31, 2014?
(2/2 Points)
P4,353,000
P4,820,000
P10,602,000
P4,802,000
35.The stockholders’ equity of Mabuhay Corporation revealed the following
information on Dec. 31, 2018:

Preference Share, P100 par value P200,000


Share premium – Preference 50,000
Ordinary share, P10 par value 500,000
Share premium – ordinary 100,000
Subscribed ordinary share 5,000
Retained earnings 190,000
Notes payable 400,000
Treasury shares, at a cost of P15 150,000

How many ordinary shares are issued?


(0/3 Points)
60,500
Correct answers: 42,500
36.Maya Corporation has 50,000 ordinary shares authorized at a par value of P5.
The following capital transactions occurred during the year:
January 14 – Issued 20,000 shares at P12 per share
June 30 - Repurchased 5,000 shares at P16 per share
December 5 - Reissued 5,000 shares held in treasury for P19 per share
How much share premium is recorded by the corporation on January 14?
(2/2 Points)
P220,000
P120,000
P140,000
P180,000
37.When shares are issued for services rendered, the measure is equal to
(1/1 Points)
Fair value of such services
Par value of the shares issued
Book value of the shares issued
Fair value of the shares issued
38.Outstanding shares of stock are
(0/1 Points)
Shares of stock owned by unknown individuals
Issued shares that are still in circulation
Authorized shares that have not yet been issued
Also called treasury shares
39.An arbitrary amount assigned by the board of directors to each share of a
given class of no-par stock is
(1/1 Points)
Redemption value
Liquidating value
Par value
Stated value
40.The stockholders’ equity of Mabuhay Corporation revealed the following
information on Dec. 31, 2018:

Preference Share, P100 par value P200,000


Share premium – Preference 50,000
Ordinary share, P10 par value 500,000
Share premium – ordinary 100,000
Subscribed ordinary share 5,000
Retained earnings 190,000
Notes payable 400,000
Treasury shares, at a cost of P15 150,000

How many preference shares are issued?


(3/3 Points)
2,000

41.Which of the following is incorrect concerning the appropriation of retained


earnings.
(1/1 Points)
Appropriations of retained earnings can be made as a result of contractual requirements
Appropriations of retained earnings can be made at the discretion of the board of directors
Appropriations of retained earnings reflect funds set aside for a designated purpose, such as
plant expansion
Appropriations of retained earnings do not change the total amount of shareholders’ equity
42.In 2020, Tiktok Corporation issued 10,000 ordinary shares at a par value of P10
per share for P100 per share. In 2021, TiktokC Corp. reacquired its 4,000 shares at
P150 per share from the estate of one of its deceased officers and immediately
cancelled these 4,000 shares. The corporation uses the cost method in accounting
for its treasury stock transactions. In connection with the retirement of shares,
how much should be recorded as retained earnings in 2021?
(2/2 Points)
P0
P400,000
P1,000,000
P600,000
43.When a corporation declares a stock split up, the total
(0/1 Points)
Issued shares increase and par value decrease
Stockholders’ equity increased
Authorized shares increase and par value decrease
Outstanding shares increase and par value decrease
44.On Feb. 1, 2020, PAT Corporation issued 5,000 shares of P100 par convertible
preference shares for P110 per share. One share of preference shares can be
converted into 2 shares of PAT Corporation’s P10 par value ordinary shares at the
option of the preference shareholder. On December 31, 2020, when the market
was P40 per share, all of the preference shares were converted. What amount
should be credited to share premium preference on February 1, 2020?
(2/2 Points)
P500,000
P50,000
P45,000
P40,000
45.Which of the following dividends will result in a decrease to total stockholders’
equity?
I. Large share dividend
II. Cash dividend
III. Small share dividend
(1/1 Points)
II and III only
III only
I, II and III
II only
46.How would the share dividend distributable account balance be presented on
the statement of financial position?
(1/1 Points)
As addition to retained earnings
As addition to additional paid-in capital
As addition to share capital
As part of current liabilities
47.Carol, Inc. has 10,000 shares of 8% P50 par preference shares and 100,000
shares of P4 par ordinary shares outstanding. Two years’ preference dividends are
in arrears. It declared cash dividends large enough to pay preference dividends in
arrears, the preference dividends for the current period, and a P1.50 dividend to
ordinary. What is the total amount of the dividend?
(2/2 Points)
P255,000
P270,000
P225,000
P260,000
48.Subscription receivable from sale of shares which are collectible currently shall
be presented as
(0/1 Points)
Deduction from the relate subscribed share capital in the shareholders’ equity section
Current asset
Long term investment
d. Other assets
49.You are given the following information: Ordinary shares, P100,000 (P100 par);
Ordinary share premium, P200,000; and retained earnings, P400,000. Assuming
only one class of share, what is the book value per share?
(2/2 Points)
P680
P7,000
P700
P800
50.In the declaration of any kinds of dividend, which of the following statement is
correct
(1/1 Points)
the total stockholders’ equity will decrease
the total stockholders’ equity will increase
retained earnings will decrease
the total stockholders’ equity will not change
51.Honest Corporation has 9%, P20 par Preference, and P70 par Ordinary. During
the year 2020, the corporation had the following equity transactions in
chronological order:
Particular No. of Shares Price per share
Issue of preference share 10,000 28
Issue of Ordinary share value 35,000 70
Reacquisition and retirement oi preference 2,000 30
Purchase of treasury ordinary share 5,000 80
Share split 2-for-1
Reissue of treasury ordinary share 5,000 52
Balances of the accounts in the stockholders’ equity section of the Dec. 31, 2019
statement of financial position were:
Preference Share, 50,000 shares 1,000,000
Ordinary share, 100,000 shares 7,000,000
Share premium – preference 400,000
Share premium – ordinary 1,200,000
Retained earnings 550,000
Dividends were paid at the end of the year on ordinary shares at P1.20 per share
and on the preference at the preference rate. Profit for the year was P850,000.
What is the total cost of the remaining treasury shares?
(0/2 Points)
P400,000
P260,000
P200,000
0
52.Paid-in capital in excess of par represents the amount of proceeds
(1/1 Points)
From the original sale of ordinary share
In excess of the par value from the original sale of ordinary share
At the current market value of the ordinary share
At the current book value of the ordinary share
53.The stockholders’ equity of GHT Corporation revealed the following
information on Dec. 31, 2018

Preference share, P100 par value 230,000


Share premium – preference 80,500
Ordinary share, P15 par value 525,000
Share premium – ordinary 275,000
Subscribed ordinary share 5,000
Retained earnings 190,000
Notes payable 400,000
Subscription receivable-ordinary 40,000

How much is the contributed capital of the corporation?


(0/3 Points)
1,075,500.
Correct answers: 1,115,500.00
54.In computing basic earnings per share, the amount of preference dividends on
non-cumulative preference shares shall be
(0/1 Points)
Deducted from net income whether declared or not declared
Deducted from net income only when declared
Added to net income only when declared
ignored
55.At the date of the financial statements, ordinary shares issued would exceed
ordinary shares outstanding as a result of
(1/1 Points)
Payment in full of the subscribed shares
Declaration of a share dividend
Declaration of a share split
Purchase of treasury shares
56.A corporation as a 6% participating preference shares issue, along with an
ordinary share issue. Which of the following statement is correct?
(0/1 Points)
Participating preference shareholders receive a maximum dividend payment of 6%
Participating preference shareholders receive an average dividend payment of 6%
Participating preference shareholders receive a minimum dividend payment of 6%
Participating preference shareholders receive only 6% in dividend
57.The corporation listed in the Philippine Stock Exchange (PSE) declared a stock-
split up of 2-for-1 share on April 30, 2021. The record date and payment date will
be on May 15, 2021 and June 15, 2021, respectively. Which of the following
statement is correct concerning the declaration of the stock-split up?
(0/1 Points)
It must be approved by the Board of Directors and SEC
It must be approved by the Board of Directors only
It must be approved by the Board of Directors, SEC, PSE and other government agencies.
It must be approved by the Board of Directors, SEC and PSE
58.The partnership is formed by two individuals who were previously sole
proprietors. Property other than cash that is part of the initial investment in the
partnership is recorded for financial accounting purposes at the
(1/1 Points)
Fair value of the property at the date of the investment
Proprietor’s book values of the property at the date of the investment
Proprietor’s book values or the fair value of the property at the date of the investment,
whichever is lower
Proprietor’s book values or the fair value of the property at the date of the investment,
whichever is higher
59.In 2020, FT Corporation acquired 12,000 shares of its P1 par value ordinary
shares at P36 per share. In 2021, the corporation issued 6,000 of these shares at
P40 per share. It uses the cost method to account for its treasury stock
transactions. As a result of the treasury stock transaction, what amount should be
recorded as Treasury shares in 2021?
(2/2 Points)
P216,000
P432,000
P240,000
P24,000

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