When preference share is cumulative, preferred dividends not declared in a period are a. called dividends in arrears b. Distribution of earnings c. never paid d. considered a liability
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4. When
a. called dividends in arrears
b. Distribution of earnings
c. never paid
d. considered a liability
Step by step
Solved in 2 steps
- 5. Dividends in arrears on cumulative preference share a. are considered to be a non-current liability b.Only occur when preferred dividends have been declared c. are considered to be a current liability d.Should be disclosed in the notes to the financial statementsS1: Noncumulative preference dividends in arrears are not paid and not disclosed. S2: Cumulative preference dividends in arrears should be reported thru a note disclosure. A. both are trueB. both are falseC. S1 is trueD. S2 is trueStatement 1: Noncumulative preference dividends in arrears are not paid and not disclosed. Statement 2: Cumulative preference dividends in arrears should be reported thru a note disclosure. A. both are trueB. both are falseC. Statement 1 is trueD. Statement 2 is true
- 1. Which of the following would never affect retained earnings? a. Correction of a prior period errorsb. Payment of long-term indebtednessc. Stock dividendd. Reissue of treasury shares 2. Appropriation for accumulated profits, if reflected in separate account, shall be shown as a. Component of equity as part of share premiumb. Component of total liabilities as current liabilityc. Component of total assets as noncurrent assetsd. Component of equity as part of reserves 3. An appropriation of accumulated profits for possible contingencies should be a. Charged with all losses related to that contingencyb. Transferred to income as losses are realizedc. Shown within shareholders’ equity in the statement of financial positiond. Classified in the liability section of the statement of financial position4. When preference share is cumulative, preferred dividends not declared in a period are a. called dividends in arrearsb. Distribution of earningsc. never paidd. considered a liability 5.…Comprehensive income would not include OA. discontinued operations. OB. extraordinary gains and losses. OC. dividends declared. OD. unrealized gains on available-for-sale securities.NPAT Less prefernce dividend is used in O a. Return on Equity O b. Return on Equity share capital О с. Return on Capital Employed O d. Debt service ratio
- S1: In the statement of changes in equity, the effect of the correction of aprior period error is presented separately for each component of equity.S2: Preference share dividend appear under the retained earnings sectionof the statement of changes in equity A. True, TrueB. False, FalseC. True, FalseD. False TrueHigh interest coverage ratio does not indicate O a. The ability to pay future dividends O b. No other answer is true O c. The ability to pay interest O d. The percentage of operating profit paid as an interestWhich of the following is False in regards to Share premium account? a. It will be shown under the shareholders equity b. It will be collected when the issue price is more than the par value of shares c. It will be collected when the par value of share is more than the issue price d. It will not be shown under current assets in the balance sheeting
- Which of the following will reduce Retained Earnings? a. Declaration of a stock dividendb. Payment of a cash dividendc. Profit for the periodd. None of theseA restriction on retained earningsa. Reduces retained earnings available for the declaration of dividends. b. Can be reported by an entry appropriating retained earnings. c. Has no effect on total retained earnings. d. All of the choices are correct.Which of the following item does not appear under the head ‘Reserves and Surplus’ in Balance Sheet a. General reserve b. Sinking Fund c. Unclaimed Dividend d. Securities Premium