Question 1

Double taxation means that

Accepted Answer

Double taxation refers to the scenario where the same income is taxed twice - once at the corporate level and again at the shareholder level. In the case of corporations, the earnings are taxed as corporate profits and again when they are distributed as dividends to the shareholders, who are then taxed on the individual level. Therefore, choice A is the best answer.

Question 2

The authorized shares of a corporation

Accepted Answer

The authorized shares of a corporation are indicated in its charter, which is a legal document that establishes the corporation and outlines its purpose, structure, and operating procedures. The authorized shares are the maximum number of shares that the corporation is allowed to issue according to its charter.

Question 3

If shares are issued for less than par value, the account

Accepted Answer

The answer of If shares are issued for less than...

Question 4

If a company issues par-value ordinary shares, the balance in the Share Capital - ordinary will be

Accepted Answer

The balance in the Share Capital - ordinary account is recorded at the par value of all shares issued, not the market value or the par value of shares outstanding.

Question 5

Voltaire Corporation issued 2,000 ordinary shares of CHF5 par value for CHF20 per share.The entry to record this transaction includes a credit to Share Premium-ordinary for

Accepted Answer

The answer of Voltaire Corporation issued 2,000 ordinary shares of...

Question 6

If Vickers Company issues 4,000 ordinary shares with a $5 par value for $140,000,

Accepted Answer

The Share Premium-Ordinary is credited for the amount received over the par value, which is $140,000 - (4,000 shares * $5 par value) = $120,000.

Question 7

When shares are issued for legal services, the transaction is recorded by debiting Organization Expense for the

Accepted Answer

The answer of When shares are issued for legal services,...

Question 8

Jahnke Corporation issued 5,000 shares of $€ 2$ par value ordinary shares for $€ 11$ per share. The journal entry to record the sale will include

Accepted Answer

The answer of Jahnke Corporation issued 5,000 shares of \(€...

Question 9

Dailey Company is a publicly held corporation whose $1 par value ordinary shares are actively traded at $22 per share.The company issued 2,000 shares to acquire land recently advertised at $55,000.When recording this transaction, Dailey Company will

Accepted Answer

Dailey Company should record the land at the fair market value of the shares issued, which is 2,000 shares x $22 per share = $44,000.

Question 10

Which of the following right of an ordinary shareholder is being eliminated by many companies?

Accepted Answer

Many companies are eliminating the pre-emptive right, which allows existing shareholders to buy new shares before the company offers them to the public, to have more flexibility in raising capital.

Question 11

Limited liability of shareholders means that

Accepted Answer

Limited liability means that shareholders are not personally responsible for the debts or liabilities of the corporation. Creditors can only seek payment from the assets of the corporation, not the assets of the shareholders themselves, unless fraud has occurred.

Question 12

If shares are issued for a non-cash asset, the asset should be recorded on the books of the corporation at

Accepted Answer

If shares are issued for a non-cash asset, the asset should be recorded on the books of the corporation at fair value, which represents the amount for which the asset could be exchanged between knowledgeable, willing parties in an arm's length transaction. Recording the asset at its fair value ensures that the financial statements accurately reflect the corporation's financial position and performance.

Question 13

Voltaire Corporation issued 2,000 ordinary shares of CHF5 par value for CHF20 per share.This transaction will increase

Accepted Answer

The issuance of 2,000 shares at CHF5 par value increases Share Capital-Ordinary by CHF10,000 (2,000 shares x CHF5).

Question 14

The par value of shares

Accepted Answer

The par value of shares is legally significant as it represents the minimum amount of money that shareholders are required to pay in order to own a share in the company. It is a nominal value assigned to the shares at the time of issuance and has no direct relation to the actual market value or worth of the shares. The other options are incorrect as the par value is not related to the market price, not set by the IASB, and not indicative of the worth of the shares.

Question 15

The sale of ordinary shares below par

Accepted Answer

The answer of The sale of ordinary shares below par
...

Question 16

The face of a share certificate shows all of the following expect

Accepted Answer

The face of a share certificate typically includes the class of the share, the shareholder's name, and the number of shares owned, but not the market value of the share, as market value fluctuates and is not fixed on the certificate.

Question 17

Which of the following is not a right of an ordinary shareholder?

Accepted Answer

Ordinary shareholders do not have the right to receive dividends. Dividends are paid to preferred shareholders before ordinary shareholders.

Question 18

Jahnke Corporation issued 5,000 shares of $€ 2$ par value ordinary shares for $€ 11$ per share. The journal entry to record the sale will include

Accepted Answer

The journal entry will include a credit to Share Premium-Ordinary for the excess over par value, which is $€ 9$ per share ($€ 11 - € 2$) multiplied by 5,000 shares, totaling $€ 45,000$.

Question 19

If ordinary shares are issued for an amount greater than par value, the excess should be credited to

Accepted Answer

According to the accounting principle of the "cost" method, the amount received in excess of the par value of the shares is credited to the Share Premium-Ordinary account. This represents the amount paid by shareholders in excess of the nominal or par value of the shares, and can be used for specific purposes such as distributing dividends or issuing bonus shares. Therefore, Choice C is the best option in this scenario.

Question 20

Share Premium-Ordinary

Accepted Answer

Share premium-ordinary represents the amount received by a company above the par value of its shares. It is reported as part of equity on the statement of financial position. A is incorrect as no-par shares without stated value does not have a par value. C is incorrect as legal capital is the amount of capital that a company must maintain in order to protect its creditors. D is incorrect as share premium-ordinary has a credit balance.

Quiz 11: Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Double taxation means that

The authorized shares of a corporation

If shares are issued for less than par value, the account

If a company issues par-value ordinary shares, the balance in the Share Capital - ordinary will be

Voltaire Corporation issued 2,000 ordinary shares of CHF5 par value for CHF20 per share.The entry to record this transaction includes a credit to Share Premium-ordinary for

If Vickers Company issues 4,000 ordinary shares with a $5 par value for $140,000,

When shares are issued for legal services, the transaction is recorded by debiting Organization Expense for the

Jahnke Corporation issued 5,000 shares of €2€ 2€2 par value ordinary shares for €11€ 11€11 per share. The journal entry to record the sale will include

Dailey Company is a publicly held corporation whose $1 par value ordinary shares are actively traded at $22 per share.The company issued 2,000 shares to acquire land recently advertised at $55,000.When recording this transaction, Dailey Company will

Which of the following right of an ordinary shareholder is being eliminated by many companies?

Limited liability of shareholders means that

If shares are issued for a non-cash asset, the asset should be recorded on the books of the corporation at

Voltaire Corporation issued 2,000 ordinary shares of CHF5 par value for CHF20 per share.This transaction will increase

The par value of shares

The sale of ordinary shares below par

The face of a share certificate shows all of the following expect

Which of the following is not a right of an ordinary shareholder?

Jahnke Corporation issued 5,000 shares of €2€ 2€2 par value ordinary shares for €11€ 11€11 per share. The journal entry to record the sale will include

If ordinary shares are issued for an amount greater than par value, the excess should be credited to

Share Premium-Ordinary

Jahnke Corporation issued 5,000 shares of $€ 2$ par value ordinary shares for $€ 11$ per share. The journal entry to record the sale will include

Jahnke Corporation issued 5,000 shares of $€ 2$ par value ordinary shares for $€ 11$ per share. The journal entry to record the sale will include