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Homework answers / question archive / Practice Question 11 Common shareholders have all of the following rights except the right to: share corporate profit through receipt of dividends
Common shareholders have all of the following rights except the right to:
| share corporate profit through receipt of dividends. |
| vote on company plans and investments. |
| vote for the board of directors. |
| share in assets upon liquidation in proportion to their holdings. |
Disadvantages of a corporation compared to a proprietorship or partnership do not include:
| ownership separated from management. |
| separate legal existence. |
| increased cost and complexity. |
| potential for additional tax. |
When a company issues shares for services:
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assets are unchanged. |
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cash is unchanged. |
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liabilities are unchanged. |
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all of these. |
Dividends in arrears relate to:
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preferred shares with a cumulative dividend feature. |
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convertible preferred shares. |
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no par preferred shares. |
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callable preferred shares. |
Which of the following best represents the guidance provided by ASPE when accounting for shares issued for non-cash consideration?
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The transaction should be valued at the more reliably measurable amount of the fair value of the goods/services received or the fair value of the shares given up. |
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The transaction can be valued at management’s choice of either the fair value of the goods/services received or the fair value of the shares given up. |
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The transaction should be valued at the fair value of the shares given up. |
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The transaction should be valued at the fair value of the goods/services received. |
The concept of a "separate legal existence" refers to which form of business organization?
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partnership |
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proprietorship |
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corporation |
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limited partnership |
Retained Earnings are:
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the total value of common shares and preferred shares issued and outstanding. |
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the value of dividends paid out since incorporation. |
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the cumulative profit (or loss) since incorporation that has not been paid out in dividends. |
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the same as profit. |
Which of the following statements concerning taxation is accurate?
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Corporations pay federal income taxes but not provincial income taxes. |
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Partnerships pay provincial income taxes but not federal income taxes. |
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Corporations pay federal and provincial income taxes. |
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Income trusts pay federal and provincial income taxes. |
Which of the following statements is NOT considered a disadvantage of the corporate form of organization?
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government regulations |
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limited liability of shareholders |
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separation of ownership and management |
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additional taxes |
After it is acquired, the lessee depreciates the leased asset
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over the life of the lease. |
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over the economic life of the asset. |
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the lessee does not depreciate the leased asset because the lessee does not have legal title to the asset. |
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only at the end of the lease term if the lessee takes legal title to the asset. |
Short- or long-term debt instruments held for trading are recorded as
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current assets at amortized cost. |
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current asset at fair value. |
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non-current assets at amortized cost. |
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non-current assets at fair value. |
Equity instruments held for trading are recorded as
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non-current assets at fair value. |
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non-current assets at amortized cost. |
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current asset at fair value. |
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current assets at amortized cost. |
Instruments that mature within 12 months of the balance sheet date are
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short-term debt instruments. |
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fair value instruments. |
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long-term debt instruments. |
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unamortized instruments. |
Regardless of the bonds purchase price, their amortized cost at maturity will equal
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face value plus discount amounts. |
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face value. |
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face value less premium amounts. |
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purchase price. |
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the income statement under other revenue and expenses.
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the balance sheet with short-term investments.
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the income statement under current operations.
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the balance sheet with long-term investments.
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The cash flow statement will not report the
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amount of cheques outstanding at the end of the period. |
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sources of cash in the current period. |
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change in the cash balance for the current period. |
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uses of cash in the current period. |
The cash flow statement is used to
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prove that revenues exceed expenses if there is a profit. |
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provide information about the cash receipts and cash payments during a period. |
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facilitate banking relationships. |
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provide information about the investing and financing activities during a period. |
The information in a cash flow statement will help users assess all of the following except
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the company’s ability to generate future cash flows. |
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the company’s ability to pay dividends and meet obligations. |
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the company’s ability to turn over its accounts receivable. |
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the reasons for the difference between profit and cash provided or used by operating activities. |
The category that is generally considered to be the best measure of a company's ability to continue as a going concern is
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cash flows from investing activities. |
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cash flows from operating activities. |
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cash flows from financing activities. |
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usually different from year to year. |
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| (a) | Record the issuance of the bonds on May 1, 2021. | |
| (b) | Record the first interest payment on November 1, 2021. | |
| (c) | Prepare any adjusting entry required at December 31, 2021. | |
| (d) | Record the second interest payment on May 1, 2022. | |
| (e) | Assume that on May 1, 2022, immediately after paying the semi-annual interest, Skysong redeemed 50% of the bonds at 98. Record the redemption of the bond. | |
| (f) | Record the third interest payment on November 1, 2022, for the remaining bonds. |
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No.
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Date
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Account Titles and Explanation
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Debit
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Credit
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(a)
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May 1, 2021
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(b)
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Nov. 1, 2021
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(c)
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Dec. 31, 2021
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(d)
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May 1, 2022
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(e)
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May 1, 2022
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(f)
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Nov. 1, 2022
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| Comparative Balance Sheet | ||||||
| 2021 | 2020 | |||||
| Cash | $ 99,170 | $ 45,550 | ||||
| Accounts receivable | 90,580 | 35,550 | ||||
| Inventory | 121,280 | 101,950 | ||||
| Investments in land | 84,380 | 106,550 | ||||
| Property, plant, and equipment | 284,480 | 200,400 | ||||
| Accumulated depreciation | (47,360) | (38,400) | ||||
| $632,530 | $451,600 | |||||
| Accounts payable | $51,980 | $47,690 | ||||
| Accrued expenses payable | 10,980 | 18,890 | ||||
| Bonds payable | 140,000 | 67,000 | ||||
| Common shares | 250,000 | 189,000 | ||||
| Retained earnings | 179,570 | 129,020 | ||||
| $632,530 | $451,600 | |||||
| Revenues | ||||||
| Sales | $283,500 | |||||
| Gain on disposal of equipment | 7,450 | |||||
| 290,950 | ||||||
| Expenses | ||||||
| Cost of goods sold | $ 95,350 | |||||
| Depreciation expense | 55,500 | |||||
| Operating expenses | 13,670 | |||||
| Income tax expense | 36,200 | |||||
| Interest expense | 2,590 | 203,310 | ||||
| Profit | $ 87,640 | |||||
| Additional Information: | ||
| 1. | Investments in land were sold at cost during 2021. | |
| 2. | Equipment costing $54,480 was sold for $15,390, resulting in a gain. | |
| 3. | Common shares were issued in exchange for some equipment during the year. No other shares were issued. | |
| 4. | The remaining purchases of equipment were paid for in cash. | |
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CONCORD INC.
Cash Flow Statement - Indirect Method |
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