Pamanasan ng Langsod ng Meynila College of Accountancy and Economics ier Piipine tnt of Accountants i Comprehensive Exam Reviewer in Fundamentals of Accounting W-Patharn 1. When shares with par value are sold, the proceeds sll be credited to the ‘a, Share capital account _ Share premium é Retained earnings @ Share capital account othe exten of the par ofthe shaves ssed with any excess being reflected in share premium i 2. shares are issued for a consideration pther then eash, the proceeds shall be measured by the a, Fair value of the shares issued ©! . Par value of te shares issued ithe considera i 3, Incase shares are issued for outstanding liabilities, wht is the measure for recording 1, Par value of the shares issued . Fair value of the shares issued g Amount of liabilities set off ‘Book value of the shares issued A. Thesotal cost of treasury shares shall be reported as (a) Deduction from shareholder's equity Asset Deduction from retained earings 4. Deduction from share premium 5. It is issuance by an entity ofits own shares to its shares to its shareholders without consideration ‘end under conditions indicating that such ection is prompted mainly by 8 desire to increase the fumber of shares cutstanding fr the purpose of electing reduction in unit market price al Share split “b. Reverse share split Stock dividend \ 4. Rerapitalization i 6 Subscription receivable and other receivables from sale of shares which are not collectible "currently shall be presented as { | | va, Deduction from the related subscribed shore capital in the shareholder's equity section b. Current assets ! . Long-term investment i 4. Other assets 1 7. Contributed capital does not include | ‘a. Share premium on ordinary and preference shares 'b.' Preference share capital ©. Capital resulting from relssuance of treasury shares at “Capital accumulated ty retention of earnings t ‘ 8, Which ofthe following isnot one of the basi rights ofa shareholder? a. The right to participate in earnings 'b, The right to maintain one’s proportional interest in the cosporation The right to participate in the proceeds of the sale of corporate assets upon liquidation ofthe corporation | gee ne_d. The right to inspect the accounting records of the corporation 9. When the total shareholder's equity is smatler than the emovat contributed capital, called & Ant loss b. A dividend cA liability 4, A deficit 10, Fhe par value of an ordinary share represents a. The liquidation value ofthe share b. The book value of the share _¢. The legal nominal vaiue assigned to the share The amoun: reseived by the corporation w 11, When collectivity is reasonably assured, the excess of the subscription price over the stated value of the no par subscribed share capital shail be recorded as, ‘a. Noparshare capital BE Share premium when the subscription is reconied ‘© Share premium when the subscription is collected 4. Share premium when the share capital is issued 12, The purchase of weasry shares a Decreases shares authorized b. Decreases shares issued c. Decreases shares outstanding, TE Has no effec on te shares outstanding 13. Nonstock dividends shal be recognized as liabilities on the & Date of declaration . Date of record ©. Date of payment 4d. Date of issuing check 14._ Dividends payable in noncash asset shall be charged to retained earnings at ‘8. Camying amount of the noncash asset |b, Fair value of the moncash asset ©. Fair value as determined by Board of Directors Appraised vate 15. ‘The issuer shall directly charge retained earnings for the par value of the shares issived in a. Two for one share spit ’. Share options _&.- Twenty percent stock dividend i ‘4. Share appreciation right : 16. Atthe beginning of the current year, Sun Company purchased 500,000 shares of Star Company, At the end, Sun distributed 250,000 shares os Star as a dividend to Sun's shareholders. This isan example of a. Liquidating dividend . Investment dividend Property dividend ‘d. Stock dividend 17, The issuer should charge retained earnings for the market value of shares issued in 2 § 1 for S stock dividendad (1 for 8 stock dividend 4 for } stock spli d. 2 for I stock split 18. Unditributed stock dividends shall be reported < a. A current liability bb. An addition to share capital outstanding “eA reduction in total shareholder's equity 4. Annote to the financial statements 19. A restriction of retained eamings is most likely to be required by the ‘a. Exhaustion of potential benefits of the investiment eredit _b,_ Purchase of treasury shares © Payment of last maturing series ofa serial bend issve Amortization of past service cost sding, total shareholde s equity div 20, For an entity that has only ordinary stares outs number of shares outstanding represents ‘a. Retum on equity b,. Stated value per share 1c, Book value per share E Price-earnings ratio 21, The effect of recording a 100% stock dividend would be 10 n Dearease the current ratio, decrease working capital and decrease book value per share Bb. Leave inventory tumover unaffected, increase earnings per share and increase book value «. Heave working capital unaffected, decrease eamings per share and decrease book value per share 4. Leave working capital unaffected, deerease eamings per share and decrease the debt 10 equity ratio 22. Which ofthe following features of preference share would mos likely be oppose by ordinary shareholders? ‘a. Par or stated value b. Callable \ c, Redeemable 4. Panicipating 25, ineomputing basic earings pt share, the mount of preference dividends on noncumulaive ‘a. Deducted from net income whether declared or not b. Deducted from net income only when dectared E- Added to net income only when declared d. Ignored “24. Imcomputng base earnings per sha, the fll amount ofthe required preference dividends on cumulative preference share forthe period shall be * a Ignored | tb. Deducted from net iicome onty when declared |g. Deducted from net income whether declared or not ‘Added to net income only when declared 25, In eompating basic loss per share, ihe required annual preference dividend on cumulative preference share shall be a, Ignotedb. Deducted from net income only when declared . Deducted from net income whether declared or not d. Added to net income only when declared 26. At the date of the financial statements, shares issued would exceed shares outstanding as 2 result of a. Declaration of share split b. Deciaration of stock dividend ‘c. Purchase of treasury shares <1 Payment in full of subscribed shares 27. Treasury shares shall be recorded at cost irespective of whether those are acquired below or ebove par value, The cost of treasury shares ucquired for noncash considerstion is usually & messured by air value of the noneash consideration given , Recorded amount of the noncash asset surrendered . Par value of the shares 1. Book value of the shares 28. “Loss” from sale of treasury shares shall be charged to ‘a. Loss on sale of treasury shares to be shown as other expense '. Retained earnings and then share premium from treasury shares Share premium from treasury shares and then retained earnings “& Share premium from original issiance, share premium ftom treasury shares and then retained earnings 29. How should the share split in which the par value per share decreases in proportion to the number ~ ‘of additional shares issued affect each ofthe following? Share premium Retained earings a Increase No effect 2. No effect No effect No effect Decrease Increase Decrease 30. The accounts below appears in the December 31, 31, 205 wil lane of Mara Company ‘Authorized common stock —— "5,000,000 Unissued common stock ———-—-—— 2,000,000, Subseribed common stock —————————~—-~1, 000,000 ‘Subscription recelvable ——____——400,000 ‘Additional paid in capital ————_——— 500,000 Retained earnings unappropriated ~~ 600,000 Retained earings sippropriated “~~~ 300,000 Revaluation surplus “200,000 ‘Treasury stock, at cost. 100,000 In its December 31, 2005 balance sheet, Mara should report total stockholders’ equity at ‘a. 5,100,000 | =, ~B.'5,500,000 ©. 4,900,000 4. 4,800,000