B 1. Voltaire Corporation issued 2,000 ordinary shares of CHF5 par ...

d 7. Treasury shares area. shares issued by the U.S. Treasury Department.b. shares purchased by a corporation and held as an investment in itstreasury.c. corporate shares issued by the treasurer of a company.d. a corporation's own shares which have been reacquired but not retired.B 8. When preference shares is cumulative, preference dividends not declared in aperiod area. considered a liability.b. called dividends in arrears.c. distributions of earnings.d. never paid.B 9. Cole Corporation issues 10,000 preference shares with a $50 par value forcash at $60 per share. The entry to record the transaction will consist of a debitto Cash for $600,000 and a credit or credits toa. Preference Shares for $600,000.b. Preference Shares for $500,000 and Share Premium—Preferred Share for$100,000.c. Preference Shares for $750,000 and Share Premium for $100,000.d. Share Premium for $600,000.D 10. Beckham Company has 1,000 shares of 6%, $100 par cumulative preferenceshares outstanding at December 31, 2011. No dividends have been paid onthese shares for 2010 or 2011. Dividends in arrears at December 31, 2011 totala. $0.b. $600.c. $6,000.d. $12,000.D 11. If a corporation declares a 10% ordinary share dividend, the account to bedebited on the date of declaration isa. Ordinary Share Dividends Distributable.b. Share Capital–Ordinary.c. Share Premium–Ordinary.d. Retained Earnings.B 12. Share dividends and share splits have the following effects on retainedearnings:Share Splits Share Dividendsa. Increase No changeb. No change Decrease

c. Decrease Decreased. No change No changea 13. The per share amount normally assigned by the board of directors to a smallshare dividend isa. the market value of the shares on the date of declaration.b. the average price paid by shareholders on outstanding shares.c. the par or stated value of the shares.d. zero.D 14. Prior period adjustments are reporteda. in the footnotes of the current year's financial statements.b. on the current year's statement of financial position.c. on the current year's income statement.d. on the current year's retained earnings statement.B 15. Van Luther Company had total equity of £8,650,000 at January 1, 2011 and£9,807,000 at December 31, 2011. The Company had net income for 2011 of£1,557,000 and paid total dividends of £400,000, including the annualpreference dividend of £320,000. Van Luther's return on equity for 2011 isa. 12.5%.b. 13.4%.c. 15.9%.d. 16.9%.b 16. At December 31, the shareholders’ equity includedShare capital–ordinary, $5 par value; 1,100,000 shares issuedand 1,000,000 shares outstanding $5,500,000Share premium–ordinary 1,400,000Retained earnings 1,500,000Treasury shares, (100,000 shares)(700,000)Total equity $7,700,000The book value per ordinary share isa. $7.00b. $7.70c. $8.40d. $7.20A 17. Jennifer Company reports the following amounts for 2011:Net income $135,000Average shareholders' equity 500,000Preference dividends 35,000

Par value preference shares 100,000The 2011 rate of return on ordinary shareholders' equity isa. 25.0%.b. 22.5%.c. 27.0%.d. 33.8%.