1. Which of the following dividends is considered as return on capital?

Answer: Liquidating Dividend

2. Which of the following will result in the increase of share premium when the
market price is above par?

Answer: Small Share Dividend

3. If an entity wishes to "Capitalize" Retained earnings, it may issue

Answer: Share Dividend

4. Which of the following will not reduce the total accumulated profits?

Declaration of share capital dividend

Correction of unrecorded expenses in prior year
Appropriation of the accumulated profits for legal requirement
Declaration of property dividend when the market price per share is higher than
par

Answer: Appropriation of the accumulated profits for legal requirement

5. Statement 1: The appropriated amounts of accumulated earnings are available

for distribution to shareholders as dividend
Statement 2: Appropriation reserve will reduce the total shareholder's equity

Answer: Both statements are incorrect

6. Statement 1: Appropriation of accumulated earnings must be through the

requirement of law or agreement per contract but could not be done at the option
of the BOD
Statement 2: Prior period errors are accounted current and prospectively

Answer: Both statements are incorrect

7. Statement 1: Liquidation dividends could be distributed only when a corporation,

including those involved in wasting assets operations, is undergoing liquidation
process
Statement 2: The shareholders, as of date of records, who are entitled to
dividend include subscribers of partially paid per share subscription

This study source was downloaded by 100000856633677 from CourseHero.com on 11-08-2022 20:46:43 GMT -06:00

https://www.coursehero.com/file/153460127/CONFRAS-M6docx/
 Answer: Both statements are correct

8. Statement 1: Prior period errors will affect the beginning balance of accumulated
profits in the year the errors are discovered
Statement 2: Current period errors do not require corrections because these will
not affect the beginning balance of the accumulated profits

Answer: Only statement 1 is correct

9. An entry is not made on the

Answer: Date of Record

10. Nonstock dividends shall be recognized as liabilities on the

Answer: Date of Declaration

This study source was downloaded by 100000856633677 from CourseHero.com on 11-08-2022 20:46:43 GMT -06:00

https://www.coursehero.com/file/153460127/CONFRAS-M6docx/
Powered by TCPDF (www.tcpdf.org)