ACCT2006 Chapter Notes - Chapter 13a: Preferred Stock, Common Stock, Share Capital

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11 Oct 2018

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The components of the equity section of the statement of financial position are contributed capital and reserves. Contributed capital consists of amounts contributed by owners and reserve comprise equity attributable to the owners of the entity other than amounts directly contributed. With companies, there is generally no clear distinction between contributed capital and profits retained in the entity. Share capital is the major account reflecting contributed equity or contributed capital. A not-for-profit entity is an entity whose principal objective is not the generation of profit and can be divided into either government or public sector companies or private entities. The ownership rights in a company are generally represented by share; that is, the share capital of a company comprises a number of units or share. Each share represents a proportional right to the net assets of the company and, with a class of share, all shares have the same equal rights.

Related Questions

All of the following statements regarding stock dividends are trueexcept:

Directors can use stock dividends to keep the market price of thestock affordable.

Stock dividends provide evidence of management's confidence thatthe company is doing well.

Stock dividends do not reduce assets or equity.

Stock dividends decrease the number of shares outstanding.

Stock dividends transfer a portion of equity from retained earningsto contributed capital.

A stock dividend:

Is not a liability on the balance sheet.

Does not reduce a corporation's assets and stockholders'equity.

Transfers a portion of equity from retained earnings to contributedcapital.

Does not affect total equity, but does affect the components ofequity.

All of these.

Prior period adjustments are reported in the:

Multiple-step income statement.

Balance sheet.

Statement of retained earnings.

Statement of cash flows.

Single-step income statement.

The withdrawals account of each partner is:

Closed to that partner's capital account with a credit.

Closed to that partner's capital account with a debit.

A permanent account that is not closed.

Credited with that partner's share of net income.

Debited with that partner's share of net loss.

A bonus may be paid:

	By a new partner when the current value of a partnership is greaterthan the recorded amounts of equity.
	By a withdrawing partner to remaining partners if the recordedvalue of the equity is overstated.
	To a new partner with exceptional talents.
	By remaining partners to a withdrawing partner if the recordedequity is understated.
	All of these.

periwinklecamel697

Carter Pearson is a partner in Event Promoters. His beginningpartnership capital balance for the current year is $55,500, andhis ending partnership capital balance for the current year is$62,500. His share of this year's partnership income was $5,750.What is his partner return on equity?

9.65%

9.75%

10.87%

9.20%

10.36%

Design Services is organized as a limited partnership, with MikoToori as one of its partners. Miko's capital account began the yearwith a balance of $46,900. During the year, Miko's share of thepartnership income was $9,400, and Miko received $5,900 indistributions from the partnership. What is Miko's partner returnon equity?

12.1%

19.3%

12.6%

20.0%

18.7%

The following information isavailable regarding Grace Smit's capital account in EnterpriseConsulting Group, a general partnership, for a recent year:

Beginning of theyear balance	$ 30,000
Share of partnershipincome	$ 10,500
Withdrawals madeduring the year	$ 6,800

What is Smit's partner return onequity during the year in question?

33.0%

11.6%

51.3%

12.3%

31.2%

Maxwell and Smart are forming a partnership. Maxwell isinvesting a building that has a market value of $81,000. However,the building carries a $55,000 mortgage that will be assumed by thepartnership. Smart is investing $22,000 cash. The balance ofMaxwell's Capital account will be:

$55,000.

$81,000.

$59,000.

$26,000.

$48,000.

Harvey and Quick have decided to form a partnership. Harvey isgoing to contribute a depreciable asset to the partnership as hisequity contribution to the partnership. The following informationregarding the asset to be contributed by Harvey is available:

Historical cost ofthe asset	$81,000
Accumulateddepreciation on the asset	$42,500
Note payable securedby the asset*	$23,000
Agreed-upon marketvalue of the asset	$47,500
*willbe assumed by the partnership

Based on this information,Harvey's beginning equity balance in the partnership will be:

$23,000

$47,500

$81,000

$38,500

$24,500

Wheadon, Davis, and Singer formed a partnership with Wheadoncontributing $58,800, Davis contributing $49,000 and Singercontributing $39,200. Their partnership agreement called for theincome (loss) division to be based on the ratio of capitalinvestments. If the partnership had income of $72,000 for its firstyear of operation, what amount of income (rounded to the nearestthousand) would be credited to Singer's capital account?

$19,200.

$28,800.

$72,000.

$24,000.

$39,200.

Christie and Jergens formed a partnership with capitalcontributions of $210,000 and $310,000, respectively. Theirpartnership agreement calls for Christie to receive a $51,000 peryear salary. Also, each partner is to receive an interest allowanceequal to 9% of a partner's beginning capital investments. Theremaining income or loss is to be divided equally. If the netincome for the current year is $117,000, then Christie andJergens's respective shares are:

$58,500; $58,500.

$69,900; $27,900.

$47,250; $69,750.

$79,500; $37,500.

$38,100; $78,900.

The partnership agreement for Wilson, Pickett & Nelson, ageneral partnership, provided that profits be shared between thepartners in the ratio of their financial contributions to thepartnership. Wilson contributed $90,000, Pickett contributed$54,000 and Nelson contributed $18,000. In the partnership's firstyear of operation, it incurred a loss of $207,000. What amount ofthe partnership's loss, rounded to the nearest dollar, should beabsorbed by Nelson?

$23,000

$69,000

$103,500

$51,750

erinlocust257

QUESTION 1

The ownership of a corporation is represented by:

		shares of stock.
		the owner's capital account.
		the revenue account.
		cash in bank account.

QUESTION 2

How many classifications does a Capital Stock Account have?

		One
		Two
		Three
		Four

QUESTION 3

The equity contributed by stockholders and equity earned throughbusiness profits represent the stockholders' equity for a:

		partnership firm.
		sole proprietorship.
		corporation.
		none of these.

QUESTION 4

Retained earnings are a part of a/an:

		asset account.
		permanent account.
		stockholders' equity account.
		temporary account.

QUESTION 5

How many sections does an Income Statement have?

		Two
		Three
		Four
		Five

QUESTION 6

Net sales are related to the:

		net income section.
		gross profit on sales section.
		revenue section.
		cost of merchandise sold section.

QUESTION 7

Sales discount and sales return and allowance are:

		revenue accounts.
		contra revenue accounts.
		permanent accounts.
		contra expenses accounts.

QUESTION 8

The total cost related to merchandise purchases during anaccounting period is the:

		net purchase.
		cost of merchandise sold.
		cost of merchandise available for sale.
		beginning merchandise inventory.

QUESTION 9

The gross profit on sale is $65,000, and operating expenses is$35,000. What will be the operating profit?

		$65,000
		$35,000
		$100,000
		$30,000

QUESTION 10

A balance sheet has the following sections:

		Assets, liabilities, and stockholders' equity.
		Income, expenses, and stockholders' equity.
		Assets, liabilities, and income.
		Operating income, operating expenses, and stockholders'equity.

QUESTION 11

A cash flow statement is used to assess the:

		net increase or decrease of cash.
		net increases of cash only.
		net decrease of cash only.
		net profit or loss of business.

ACCT2006 Chapter Notes - Chapter 13a: Preferred Stock, Common Stock, Share Capital

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