ch02-tb-leo-10e

Chapter2:Financingcompanyoperations©JohnWiley&SonsAustralia,Ltd20152.1TestbanktoaccompanyCompanyAccounting10ebyKenLeo,JeffreyKnapp,SueMcGowan&JohnSweetingPreparedbyPeterBaxter©JohnWiley&SonsAustralia,Ltd2015TestbanktoaccompanyCompanyAccounting10e©JohnWiley&SonsAustralia,Ltd20152.2Chapter2:FinancingcompanyoperationsMultiple-choicequestions1.Inrespecttotheissueofsharesbycompanies,whichofthefollowingstatementsisincorrect?a.Companiescanconvertordinarysharesintopreferenceshares.*b.Companiescanonlyissueordinaryshares.c.Companiescanissueanyspecifiednumberofsharesatanyprice.d.Companiescanissuebothordinaryandpreferenceshares.Correctanswer:bLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.2.AccordingtotheCorporationsAct,whenacompanyissuessharestothepublic,theissueprice,termsandrightsofthesharesaredeterminedby:a.theAustralianSecuritiesExchange.*b.thecompany’sdirectors.c.theAustralianInvestmentsandSecuritiesCommission.d.thecompany’sauditors.Correctanswer:bLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.3.Beforeacompanyissuessharestothepublic,thecompanymust:a.registertheprospectuswiththeAustralianAccountingStandardsBoard.b.firstofferthesharestotheexistingshareholders.c.registertheprospectuswiththeAustralianSecuritiesExchange.*d.provideadisclosuredocumentwithanapplicationformattached.Correctanswer:dLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.Chapter2:Financingcompanyoperations©JohnWiley&SonsAustralia,Ltd20152.34.ABCLimitedissuedaprospectusoffering100000ordinarysharesatanissuepriceof$2.50each,payable$1.50pershareonapplication.Thecompanyreceivedapplicationsfor110000shares.Whichofthefollowingentriescorrectlyrecordstheapplicationmoney?a.DRApplication$165000CRCashtrust$165000b.DRCashtrust$250000CRApplication$250000*c.DRCashtrust$165000CRApplication$165000d.DRCashtrust$275000CRApplication$275000Correctanswer:cLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.5.Whenacompanyrequestsafurtherpaymentfromshareholdersoftheunpaidamountsontheirshares,it:*a.makesacallontheshares.b.makesafurtherallotmentofthoseshares.c.convertsthesharesintodebentures.d.forfeitstheshares.Correctanswer:aLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.6.Whichofthefollowingistheappropriatejournalentrytorecordthecashcollectedfromapplicantsforsharesbeforethesharesareactuallyissued?a.Increasecashtrustaccount:increasesharecapitalaccountb.Increaseapplicationaccount:decreasesharecapitalaccountc.Increasesharecapitalaccount:decreasecashtrustaccount*d.Increasecashtrustaccount:increaseapplicationaccountCorrectanswer:dLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.TestbanktoaccompanyCompanyAccounting10e©JohnWiley&SonsAustralia,Ltd20152.47.Whensharesareissuedfullypayableonapplication,thejournalentriestorecordtheissue(assumingtheminimumsubscriptionisreached)area.CashtrustDrXApplicationCrXAllotmentDrXSharecapitalCrXb.CashtrustDrXApplicationCrXCashDrXCashtrustCrXc.CashDrXCallCrXCallDrXSharecapitalCrX*d.CashtrustDrXApplicationCrXApplicationDrXSharecapitalCrXCashDrXCashtrustCrXCorrectanswer:dLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.8.Thejournalentrytorecordfurtherreceiptsofcashdueontheallotmentofshareswillincludewhichofthefollowinglineitems?a.DRAllotmentb.DRSharecapital*c.CRAllotmentd.CRCashCorrectanswer:cLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.Chapter2:Financingcompanyoperations©JohnWiley&SonsAustralia,Ltd20152.59.Thejournalentrytorecordtheamountreceivablewhenacallismadebythecompanyis:*a.DRCallCRSharecapitalb.DRAllotmentCRSharecapitalc.DRSharecapitalCRCalld.DRCashtrustCRCallCorrectanswer:aLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.10.Afterthecompletionofallstepsintheissueofshares,thecompany’sstatementoffinancialpositionwillshowwhichofthefollowingchanges?a.Assetsincreased,liabilitiesincreasedb.Assetsdecreased,equityincreasedc.Assetsdecreased,liabilitiesdecreased*d.Assetsincreased;equityincreasedCorrectanswer:dLearningObjective2.1~accountfortheissueofsharesfullysubscribed,andpayableinfullorbyinstalments.11.XYZLtdwasregisteredasacompanyon1July2013.On4July2013,ABCLtdissuedaprospectusoffering200000ordinarysharesatanissuepriceof$5.00each,payable$3.00onapplicationand$2.00onallotment.Applicationsclosedon1August2013withthecompanyhavingreceivedapplicationsfor220000shares.Afterapplicationbutpriortoallotment,thebalanceintheapplicationaccountwouldbe:a.$600000credit.b.$1000000credit.c.$660000debit.*d.$660000credit.Correctanswer:dLearningObjective2.1TestbanktoaccompanyCompanyAccounting10e©JohnWiley&SonsAustralia,Ltd20152.612.Iftheminimumnumberofapplicationsspecifiedinthedisclosuredocumentisnotreceived,allapplicationmoneymustberefundedtoapplicants.Themi