12. Select the statement that is incorrect concerning the appropriations of retained earnings. a. Appropriations of retained earnings do not change the total amount of shareholders' equity. O b. Appropriations of retained earnings reflect funds set aside for a designated purpose, such as plant expansion. c. Appropriations of retained earnings can be made as a result of contractual requirements. O d. Appropriations of retained earnings can be made at the discretion of the board of directors.

12. Select the statement that is incorrect concerning the appropriations of retained earnings. a. Appropriations of retained earnings do not change the total amount of shareholders' equity. O b. Appropriations of retained earnings reflect funds set aside for a designated purpose, such as plant expansion. c. Appropriations of retained earnings can be made as a result of contractual requirements. O d. Appropriations of retained earnings can be made at the discretion of the board of directors.

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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which of the following is a control right? shareholders right to elect the members of the board of directors and to receive the remaining liquidated value of assets shareholders rights to receive the remaining liquidated value of assets shareholders right to elect the members of the board of directors bondholders right to receive interest payments
If a company estimates that it is "reasonably possible" that it will lose a significant amount in a lawsuit, then this contingent liability: a. should be reported as a liability on the balance sheet. b. should be disclosed in the footnotes to the financial statements. c. need not be disclosed. d. should be reported as a contra-liability on the balance. sheet. e. should be reported as a reduction of stockholders' equity on the balance sheet.
21.Retained earnings a. Normally approximates a company's cumulative net income less dividends declared b. Can be subject to a statutory restriction by a state. c. Can be subject to restrictions due to loan agreements. d. Can be subject to appropriation by a corporation's directors to limit dividends.
Which are segments are reportable segments? Is there a sufficient number of reportable segments disclosed? If the company is a non public entity, which segments are required to be disclosed?
{Auditing} 15. Find the nature of materiality if the client incorrectly selects and applies accounting policy which has negligible effect in the current period but has significant effect on the future period. a. Material by nature b. None of the options c. Materiality by the amount for financial statements as a whole d. Either materiality by amount or materiality by nature
4. Management accounting is primarily concerned with?a) Providing statutory information for external useb) Providing internal information for use by managementc) Providing tax advice for internal used) Providing financial information only for use by management
Which of the following is an assumption made in the preparation of the financial statements? Select one: a. The current market value is assumed to be less relevant than the original cost paid. b. Financial statements are prepared for a specific entity that is distinct from the entity's owners. c. The preparation of financial statements for a specific time period assumes that the balance sheet covers a designated period of time. d. Financial statements are prepared assuming that inflation
8. In the absence of evidence to the contrary, all the retained earnings of an entity can be declared as dividends. In order to limit or restrict the payment of dividends, a corporation makes appropriations of retained earnings. Appropriation for treasury shares is what type of retained earnings appropriation? a. Contractual appropriation b. Voluntary appropriation c. Legal appropriation d. Discretionary appropriation
12. The practitioner's independence is not required in which of the following engagements? A. Audit of historical financial statements B. Review of historical financial statements C. Examination of prospective financial statements D. Installation of accounting information systems
An entity has made an error in the balance sheet. During the current year, a bond has been classified as a non-current liability rather than recording it as a current liability. However, the entity will amend this error in the next financial year (Amend as a current liability). Explain how the employees/managers will impact on this error?
If the statement of financial position error is discovered in a subsequent accounting period, what action is to be done by the entity? A. Reclassify the item to its proper real account but do not restate the statement of financial position of the prior year affected by the error. B. Reclassify the item to its proper real account. C. Restate the statement of financial position of the prior year affected by the error. D. Reclassify the item to its proper real account and restate the statement of financial position of the prior year affected by the error