Sharehoder's Equity

The basics
The  forms of org are proprietorship, partnership, and corporation. ncorporation gives sharehoders
protection against caims on their persona assets and aows greater access to capita markets. f there
are no restrictive provisions, each share has the right to share proportionatey in profits, right to share
management proportionatey (vote for directors), and the right to corporate assets upon iquidation. An
additiona right to share proportionatey in any new issues of shares of the same cass (caed the
preemptive right) may aso be attached to the share
f the reacquisition cost of the shares is greater than the origina cost, the acquisition cost is aocated to
share capita, then contributed surpus, and then retained earnings. f the cost is ess, the cost is
aocated to share capita (to stated or assigned cost) and to contributed surpus.

Preferred Shares
Preferred shares are a specia cass that possess certain preferences or features that common shares do
not have. Most often, there is a preference over dividends and a preference over assets in the event of
iquidation. Other preferences may be attached to specific shares. Preferred sharehoders give up some
or a of the rights normay attached to common shares. Because the capitaization of and by the essee
in a capita or finance ease that does not transfer tite resuts in an unwanted and unintended effect on
the essee’s financia statements, the portion of such eases that reates to and is accounted for as an
operating ease.

Mutipe
Answer No. Description b 88. Cacuation of cash dividend aocation d 8. Cacuation of cash dividend
aocation b 0. Cacuation of cash dividend aocation c . Cacuation of cash dividend aocation b 2.
Cacuation of cash dividend aocation b . Cacuation of cash dividend aocation b . Cacuation of
cash dividend aocation b 5. Determine entry to incorporate a proprietorship

Choice
Retirement of par vaue shares c *0. Sae of treasury shares a *. Canceation of treasury shares c
*2. Effect of treasury shares on equity d *. Tota equity with treasury shares exchange c *.
Cacuation of contributed surpus with treasury shares transactions d *5. Recording retirement of
shares b *. Retained earnings baance with treasury shares transactions a *7. Retained earnings
baance with canceed shares b *8. Retained earnings baance with treasury shares transactions c
*. Effect of stock dividend on retained earnings (with treasury shares) a *20. Cacuate baance in
retained earnings b *2. Effect of reissuance of treasu