Question 1

Retained earnings are a component of

Accepted Answer

Retained earnings are the portion of a company's profits that are not distributed as dividends but instead are kept and reinvested in the business. They are therefore considered a component of reserves.

Question 2

Accounting for share buy-backs is prescribed by

Accepted Answer

The answer of Accounting for share buy-backs is prescribed by
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Question 3

In relation to share capital, AASB 101 does not require disclosure in the financial report of:

Accepted Answer

AASB 101 requires the disclosure of the number of shares on issue at the end of the year (A), restrictions on dividends payable to certain classes of shareholders (C) and the total dollar value of share capital at the end of the year (D). However, it does not require disclosure of the amount of any over or under subscription of new share issues during the year (B).

Question 4

Gains or losses that arise as a result of translating foreign currency denominated operations into the reporting currency are recognised in income:

Accepted Answer

The answer of Gains or losses that arise as a...

Question 5

AASB 101 requires that information in relation to dividends paid or declared during the year be disclosed in:

Accepted Answer

AASB 101 allows for the disclosure of information regarding dividends paid or declared during the year in either the Statement of Changes in Equity or the notes to the financial statements. Both options are acceptable under the standard. The Statement of Comprehensive Income is not required to disclose information regarding dividends.

Question 6

AASB 101 requires that a reconciliation between the carrying amount of each class of contributed equity capital and each reserve at the beginning and end of each period be disclosed in:

Accepted Answer

AASB 101 requires a reconciliation between the carrying amount of each class of contributed equity and each reserve at the beginning and end of each period. This can be disclosed either in the Statement of Changes in Equity or in the notes to the financial statements. Option A is incorrect because the reconciliation should not be disclosed in the Statement of Profit or Loss and Other Comprehensive Income. Option B is incorrect because the reconciliation can also be disclosed in the Statement of Changes in Equity.

Question 7

Which of the following does not appear in the Statement of Changes in Equity?

Accepted Answer

The answer of Which of the following does not appear...

Question 8

Gains and losses on available-for-sale financial assets are recognised directly in equity until the financial asset is derecognised. At this time the cumulative gain or loss previously recognised is:

Accepted Answer

Gains and losses on available-for-sale financial assets are recognized in other comprehensive income and accumulated in the equity section of the balance sheet under a separate component of equity (often called "other reserves") until the financial asset is derecognized or sold. At that point, the cumulative gain or loss previously recognized in equity is reclassified from equity to profit or loss as a reclassification adjustment. This process ensures that the gains or losses impact the income statement in the period in which the asset is derecognized, providing a more accurate reflection of the company's financial performance related to the disposal of the asset.

Question 9

Whether a dividend is paid by a company depends on the decisions made by the:

Accepted Answer

The directors of the company are responsible for making decisions regarding dividend payments to shareholders. They consider factors such as the company's financial performance, cash reserves, and growth plans before making a decision on whether to distribute dividends. The creditors, auditors, and accounting standards boards do not have a direct role in determining whether or not a dividend is paid.

Quiz 3: Shareholders Equity: Share Capital and Reserves