Question 1

A share dividend is not a liability on the balance sheet because it does not require a distribution of assets.

Accepted Answer

A share dividend involves distributing additional shares of a company's stock to its shareholders, rather than distributing assets. Therefore, it is not considered a liability on the balance sheet.

Question 2

A share dividend capitalizes retained earnings because it decreases a company's contributed capital.

Accepted Answer

A share dividend does not decrease a company's contributed capital. It instead distributes a portion of retained earnings to shareholders in the form of additional shares, without changing the amount of contributed capital.

Question 3

A company can change from one acceptable accounting principle to another as long as the change improves the usefulness of information in its financial statements or it is required by IFRS.

Accepted Answer

According to the International Accounting Standards Board (IASB), a company can change from one acceptable accounting principle to another as long as the change improves the usefulness of information in its financial statements or it is required by IFRS. This is known as a change in accounting policy and must be disclosed in the financial statements.

Question 4

A share dividend is a distribution of corporate assets as a dividend that returns part of the original investment to shareholders.

Accepted Answer

A share dividend is a distribution of additional shares of the company's stock to existing shareholders, not a return of the original investment but rather a distribution that increases the number of shares held.

Question 5

The journal entry to record $25,000 market value in share dividends on the date of declaration can be a debit to share dividends and a credit to common share dividends distributable.

Accepted Answer

This entry would represent the initial recognition of the dividend, with a debit to Share Dividends and a credit to Common Share Dividends Distributable.

Question 6

A share dividend reduces the number of previously outstanding shares.

Accepted Answer

A share dividend does not reduce the number of previously outstanding shares, but instead distributes additional shares to current shareholders. This can result in a dilution of the value of each individual share, but does not change the total number of outstanding shares.

Question 7

A reverse share split reduces the market value of shares and the par value per share.

Accepted Answer

A reverse share split, also known as a stock consolidation or reverse stock split, reduces the number of outstanding shares of a company and increases the value of each share proportionally. Therefore, the market value of shares may increase, while the par value per share remains the same.

Question 8

A share split decreases the market price of the company shares.

Accepted Answer

A share split increases the number of shares outstanding, which typically reduces the market price per share to make the shares more affordable to investors, without changing the overall market capitalization of the company.

Question 9

A cash dividend does not reduce a corporation's assets or equity,while a share dividend reduces both.

Accepted Answer

A cash dividend reduces the corporation's assets as cash is being paid out to shareholders, and it also reduces equity as retained earnings are decreasing. On the other hand, a share dividend does not reduce assets but reduces equity as additional shares are being issued and distributed to shareholders.

Question 10

A share dividend is a corporation's distribution of its own shares to its shareholders without receiving any payment in return.

Accepted Answer

A share dividend is a distribution of shares to shareholders without any payment required. It is a way for a company to reward its shareholders with additional ownership in the company without using cash reserves.

Question 11

The journal entry to record $10,000 in a share dividend on the declaration date can include a debit to cash dividends declared and a credit to dividends payable.

Accepted Answer

The answer of The journal entry to record $10,000 in...

Question 12

The statement of comprehensive income is a detailed statement of net income plus or minus any other comprehensive income items.

Accepted Answer

The statement of comprehensive income includes net income and any other comprehensive income items, such as changes in value of available-for-sale investments or currency translation adjustments.

Question 13

Earnings per share is the amount of income earned by each share of a company's outstanding common shares.

Accepted Answer

Earnings per share (EPS) is indeed the amount of income earned by each share of a company's outstanding common shares.

Question 14

A share split affects total equity as reported on the balance sheet.

Accepted Answer

A share split increases the number of shares outstanding while proportionally decreasing the price per share, but it does not change the total equity of a company as reported on the balance sheet.

Question 15

If a company's activities include operations that are being discontinued,the income or loss effects of the discontinued operations are included on the income statement in income from continuing operations.

Accepted Answer

The income or loss effects of discontinued operations are presented as a separate item on the income statement, below income from continuing operations.

Question 16

A 10% share dividend increases the number of outstanding shares.

Accepted Answer

When a company declares a 10% share dividend, it means that for every ten shares an investor owns, they will receive one additional share. This increases the number of outstanding shares without affecting the total value of the company.

Question 17

A share dividend increases the number of previously outstanding shares.

Accepted Answer

A share dividend results in issuing additional shares to existing shareholders, thus increasing the total number of shares outstanding.

Question 18

A share split is the distribution of additional shares to shareholders according to their percent of ownership.

Accepted Answer

A share split is also known as a stock split, and it involves the company issuing additional shares to its shareholders based on their percentage of ownership. This is done to decrease the share price and increase liquidity, making the stock more accessible to a wider range of investors.

Question 19

Share dividends are recorded at market value.

Accepted Answer

Share dividends are recorded at market value as they are considered as a distribution of profits to shareholders, resulting in an increase in the value of their holdings.

Question 20

A share dividend reduces a corporation's assets and equity.

Accepted Answer

A share dividend redistributes a corporation's existing equity among its shareholders without reducing total assets or overall equity; it simply reallocates the equity from retained earnings to common stock.

Quiz 14: Corporate Reporting: Income,earnings Per Share,and Retained Earnings