Problem 21-30 Multiple choice (AICPA Adapted)1. When collectibility is reasonably assured, the excess ofthe subscription price over the stated value of no parordinary share subscribed shall be recorded asa. No par ordinary share capitalb. Share premium when the subscription is recorded.c. Share premium when the subscription is collected.d. Share premium when the ordinary share is issued.2. The purchase of treasury ordinary sharesa. Decreases authorized ordinary share capitalb. Decreases issued ordinary sharesc. Decreases outstanding ordinary sharesd. Has no effect on ordinary shares outstanding3. When treasury shares are purchased for more than parvalue, what account or accounts shall be debited?a. Treasury shares for the par value and share premiumfor the excess of purchase price over the par value.Share premium for the purchase price.Treasury shares for the purchase price.b.c.d.Treasury shares for the par value and retained earningsfor excess of the purchase price over the par value.4. Which statement best describes the net effect on retainedearnings of the purchase and sale of treasury shares?a. Retained earnings may never be increased butsometimes decreasedb.Retained earnings may never be increased or decreasedRetained earnings may be increased but never decreasedd. Retained earnings account is not affected5. An entity issued rights to the existing shareholders topurchase unissued ordinary shares at more than parvalue. Share premium would be recorded when the rightsa. Expireb. Are exercisedBecome exercisabled. Are issued6. Toffotha.b.C-d7. TVatiabсd8. ECS€abC9.110. ed)ess ofo parded.ted.ed.n parniumlue.ningsinedes?buteasedasedrs toparghts6.Treasury shares were acquired for cash at a price in excessof par value. The treasury shares were subsequently soldthe effect on total shareholders' equity?for cash at a price in excess of acquisition cost. What is7.a.فن فيb.IncreaseDecreaseDecreaseNo effectPurchase of treasury Sale of treasuryDecreaseNo effectIncreaseNo effectwere acquired for cash at more than parvalue, and then subsequently sold for cash at more thanacquisition cost. What is the effect on share premium fromtreasury shares?Purchase of treasury Sale of treasuryIncrease IANNo effectIncreaseNo effecta. Increaseb. Decreasec. No effectd. No effectluan company8. How would a share split in which the par value per sharedecreases in proportion to the number of additionalshares issued affect share premium and retainedearnings, respectively?a.Increase and No effectb. No effect and No effectNo effect and Decreaseand DecreaseC.d. Increase9. How would a share split affect assets and shareholders'equity, respectively?a. IncreaseIncreaseandand No effectb. No effect andand Increaseand No effectc. No effect andd. Increase10. Share split is issued primarily toa. Increase the number of outstanding sharesb. Increase the number of authorized sharesc. Increase legal capitald. Induce a decline in market value per share765pes (30,000X1000 X for15 (F0,000in (30.00(250am (śm(2liamninshold.bestaby

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1. When collectibility is reasonably assured, the excess of the subscription price over the stated value of no par ordinary share subscribed shall be recorded as a. No par ordinary share capital b. Share premium when the subscription is recorded. c. Share premium when the subscription is collected. d. Share premium when the ordinary share is issued. 2. The purchase of treasury ordinary shares a. Decreases authorized ordinary share capital b. Decreases issued ordinary shares C. Decreases outstanding ordinary shares d. Has no effect on ordinary shares outstanding 3. When treasury shares are purchased for more than par value, what account or accounts shall be debited?

1. When collectibility is reasonably assured, the excess of the subscription price over the stated value of no par ordinary share subscribed shall be recorded as a. No par ordinary share capital b. Share premium when the subscription is recorded. c. Share premium when the subscription is collected. d. Share premium when the ordinary share is issued. 2. The purchase of treasury ordinary shares a. Decreases authorized ordinary share capital b. Decreases issued ordinary shares C. Decreases outstanding ordinary shares d. Has no effect on ordinary shares outstanding 3. When treasury shares are purchased for more than par value, what account or accounts shall be debited?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Problem 21-30 Multiple choice (AICPA Adapted)
1. When collectibility is reasonably assured, the excess of
the subscription price over the stated value of no par
ordinary share subscribed shall be recorded as
a. No par ordinary share capital
b. Share premium when the subscription is recorded.
c. Share premium when the subscription is collected.
d. Share premium when the ordinary share is issued.
2. The purchase of treasury ordinary shares
a. Decreases authorized ordinary share capital
b. Decreases issued ordinary shares
c. Decreases outstanding ordinary shares
d. Has no effect on ordinary shares outstanding
3. When treasury shares are purchased for more than par
value, what account or accounts shall be debited?
a. Treasury shares for the par value and share premium
for the excess of purchase price over the par value.
Share premium for the purchase price.
Treasury shares for the purchase price.
b.
c.
d.
Treasury shares for the par value and retained earnings
for excess of the purchase price over the par value.
4. Which statement best describes the net effect on retained
earnings of the purchase and sale of treasury shares?
a. Retained earnings may never be increased but
sometimes decreased
b.
Retained earnings may never be increased or decreased
Retained earnings may be increased but never decreased
d. Retained earnings account is not affected
5. An entity issued rights to the existing shareholders to
purchase unissued ordinary shares at more than par
value. Share premium would be recorded when the rights
a. Expire
b. Are exercised
Become exercisable
d. Are issued
6. T
of
fo
th
a.
b.
C-
d
7. T
V
a
ti
a
b
с
d
8. E
C
S
€
a
b
C
9.1
10.

ed)
ess of
o par
ded.
ted.
ed.
n par
nium
lue.
nings
ined
es?
but
eased
ased
rs to
par
ghts
6.
Treasury shares were acquired for cash at a price in excess
of par value. The treasury shares were subsequently sold
the effect on total shareholders' equity?
for cash at a price in excess of acquisition cost. What is
7.
a.
فن في
b.
Increase
Decrease
Decrease
No effect
Purchase of treasury Sale of treasury
Decrease
No effect
Increase
No effect
were acquired for cash at more than par
value, and then subsequently sold for cash at more than
acquisition cost. What is the effect on share premium from
treasury shares?
Purchase of treasury Sale of treasury
Increase IAN
No effect
Increase
No effect
a. Increase
b. Decrease
c. No effect
d. No effect
luan company
8. How would a share split in which the par value per share
decreases in proportion to the number of additional
shares issued affect share premium and retained
earnings, respectively?
a.
Increase and No effect
b. No effect and No effect
No effect and Decrease
and Decrease
C.
d. Increase
9. How would a share split affect assets and shareholders'
equity, respectively?
a. Increase
Increase
and
and No effect
b. No effect and
and Increase
and No effect
c. No effect and
d. Increase
10. Share split is issued primarily to
a. Increase the number of outstanding shares
b. Increase the number of authorized shares
c. Increase legal capital
d. Induce a decline in market value per share
765
pes (30,000X
1000 X for
15 (F0,000
in (30.00
(250
am (śm
(2
liam
nins
hold.
be
sta
by

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