ACC2363_Assignment 8_Q #11 Purchase of Company's Own Shares

Interpretation No. 46R relates to the issue of whether an investing firm is the primary beneficiary in a variable-interest entity. When is an entity classified as a variable interest entity?   Starting with free cash flows from operations, discuss how an analyst would measure free cash flows to common equity shareholders.

The cost of retained earnings is less than the cost of ordinary shares because of *a. the issuance cost.b. agency costs of free cash flow.c. the taxation on earnings.d. the trust fund doctrine.

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Accounting type Question: Bonus shares cannot be issued out of: A. Profit and Loss a/c B. Capital Redemption reserve C. General reserve D. Dividend equalisation fund

Select all that apply Which of the following items are classified as noncash investing and financing activities? (Check all that apply.) Conversion of preferred stock to common stock Lease of assets in a long-term lease transaction Repayment of a note with cash Retirement of debt by issuing stock

Which of the following statements is false?   A.   Mutual funds are pool investor funds to purchase financial instruments and thus reduce risks through diversification.   B.   Initial public offering (IPO) occurs when firm issues stock in the public market for the first time.   C.   The difference between current assets and non-current assets equals to working capital.   D.   Owner’s equity is the residual interest in assets that remains after subtracting an entity’s liabilities.

Which of the following is not a capital market instrument? a. Corporate stock b. Mortgages c. Corporate bonds d. Repurchase agreement

Which of the following is NOT correct regarding trading securities *   a. Unrealized holding gains or losses are reported in profit or loss b. Share in profit of the investee increases carrying value of the investment c. These are classified as current assets. d. Cash dividends shall be recognized as dividend income

Indicate in which of the three categories Preferred shares issued for cash should appear and whether it is an inflow or an outflow of cash: Multiple Choice Operating inflow None of the other alternatives are correct Financing outflow Financing inflow Investing outflow X

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A company’s publicly listed shares:   a. Can be traded on any share market around the world   b. Represent an ownership claim on the company’s real assets (net of liabilities)   c. Are guaranteed to provide a dividend cash-flow   d. All of the above   e. None of the above

Which statement cash of flows shows the inflows and outflows of the issue and repurchase of stock? A. Fiancing  B. Operating  C. Investing  D. None of the above

Choose the correct.When an investor uses the equity method to account for investments in common stock, the investor’s share of cash dividends from the investee should be recorded as:  a. A deduction from the investor’s share of the investee’s profits.b. Dividend income.c. A deduction from the stockholders’ equity account, Dividends to Stockholders.d. A deduction from the investment account(AICPA adapted)

1. Identify the most acceptable value of share capital in exchange of non-cash asset.  options •Fair market value of share issued •Fair market value of non-cash asset received •Par value of share capital issued. •Carrying value of the non-cash asset received. 2. Which of the following is included in the equity section of a corporate business?  •Investment in equity shares •Treasury shares •Subscription Receivable – current •Unearned revenue