10/26/23, 10:26 AM
Recorded Online SHE Quiz: Attempt review
Dashboard / My courses / ACT113-FG5-2-2:30-5:30-MTH / TOPICAL QUIZ FOR MIDTERM / Recorded Online SHE Quiz
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Thursday, 26 October 2023, 9:49 AM
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Question 1
Incorrect
Mark 0.00 out of 1.00
MCQ | Evaluate the following statements carefully:
S1. When shares are subscribed, it is not possible to record premium.
S2. Retained earnings is included in the total shareholders’ equity and contributed capital, but not in legal capital.
S3. Outstanding shares exclude subscribed shares.
a. True, False, True
b. False, False, False
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c. False, True, False
d. False, False, True
e. False, True, True
f. True, True, False
g. True, True, True
Question 2
Correct
Mark 1.00 out of 1.00
MCQ | Evaluate the following statements carefully:
S1. Share premium of the no-par value share capital shall be included in legal capital but not in contributed capital.
S2. Share premium of the par value share capital shall be included in contributed capital but not in legal capital.
S3. Subscribed share capital is included in both legal and contributed capital and are entitled to receive dividends.
a. True, True, False
b. False, False, False
c. True, False, True
d. True, True, True
e. False, True, False
f. False, True, True
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Question 3
Correct
Mark 1.00 out of 1.00
MCQ | Evaluate the following statements carefully:
S1.Treasury shares are contra-equity at their acquisition cost.
S2. Dividends declared to redeemable preference shares are recorded with a debit to retained earnings and a credit to interest
payable
S3. Costs related to issuance of shares may be debited to share issuance cost.
a. False, True, False
b. False, True, True
c. False, False, True

d. True, False, True
e. True, True, False
f. False, False, False
g. True, True, True
Question 4
Incorrect
Mark 0.00 out of 1.00
MCQ | Evaluate the following statements carefully:
S1. Share splits and share dividends have the same effect on a company’s retained earnings and total shareholders’ equity.
S2. When a share dividend is declared on the ordinary shares outstanding, a company is required to debit the par value of the shares
issued from retained earnings.
S3. All dividends, except for liquidating dividends, reduce the total shareholders’ equity of a corporation.
a. False, False, True
b. True, True, False
c. False, True, True
d. False, True, False
e. False, False, False
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f. True, True, True
g. True, False, True
Question 5
Not answered
Marked out of 1.00
Computational | On December 31, 2025, the equity section of XYZ, Inc., was as follows: Share capital—ordinary, par value P10;
authorized 30,000 shares; issued and outstanding 9,000 shares - P 90,000 Share premium—ordinary - 116,000 Retained earnings 174,000 On March 31, 2026, XYZ declared a 10% share dividend, and accordingly 900 additional shares were issued, when the fair
value was P18 per share. For the three months ended March 31, 2026, XYZ sustained a net loss of P32,000. The balance of XYZ’s
retained earnings as of March 31, 2026, should be (ignore currency unit)
Answer:
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Question 6
Correct
Mark 1.00 out of 1.00
MCQ |Which of the following best describes a possible result of treasury share transactions by a corporation?
a. May decrease but not increase retained earnings.
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b. May increase net income if the cost method is used.
c. May decrease but not increase net income.
d. May increase but not decrease retained earnings.
Question 7
Correct
Mark 1.00 out of 1.00
MCQ | Evaluate the following statements carefully:
S1. A security is classified as liability if the issuer has the obligation to pay cash or other noncash assets to the security holder.
S2. Returns paid to the holder of redeemable preference shares are recognized in profit or loss.
S3. The share contributed capital is equal to the total amount of proceeds received when issuing the shares.
a. False, False, False
b. True, False, True
c. True, True, False
d. False, True, True
e. True, True, True
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Question 8
Incorrect
Mark 0.00 out of 1.00
MCQ | Evaluate the following statements carefully:
S1. When preference shares share ratably with the ordinary shareholders in any profit distributions beyond the prescribed rate this is
known as the cumulative feature.
S2. A “gain” from the sale of treasury shares is reflected when using the cost method of recording treasury shares transactions as an
increase in the retained earnings amount.
S3. ABC Corp. purchased its own par value shares on January 1, 2023 for P20,000 and debited the treasury shares account for the
purchase price. The shares were subsequently sold for P12,000. The P8,000 difference between the cost and sales price should be
recorded as a deduction from share premium—treasury without regard as to whether or not there have been previous net “gains”
from sales of the same class of shares included therein.
a. True, True, False
b. True, True, True
c. False, False, False
d. False, True, True
e. True, False, True
f. False, True, False
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g. True, False, False
h. False, False, True
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Question 9
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Computational | ABC Inc., has 2,000 shares of 6%, P50 par value, cumulative preference shares and 100,000 shares of P1 par value
ordinary shares outstanding at December 31, 2026, and December 31, 2025. The board of directors declared and paid a P5,000
dividend in 2025. In 2026, P24,000 of dividends are declared and paid. What are the dividends received by the preference
shareholders in 2026? (ignore currency unit)
Answer:
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Question 10
Incorrect
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Computational | ABC Co. issues 10,000 shares of P10 par value convertible preference shares for P12 cash per share. Each share is
convertible into 4 ordinary shares. On this date the P1 par value ordinary shares are selling for P3 per share. Approximately 2 years
later, ABC’s shareholders convert their preference shares into ordinary shares. On the date of conversion the preference shares are
selling for P16 and the ordinary shares are selling for P5 per share. The journal entry on the date of conversion will include which of
the following?

a. Credit Share Capital—Preference P20,000.
b. Credit Share Premium—Ordinary P160,000.
c. Credit Share Premium—Ordinary P80,000.
d. Credit Share Capital—Ordinary P100,000.
Question 11
Not answered
Marked out of 1.00
Computational | At the beginning of 2026, ABC Company had retained earnings of P150,000. During the year ABC reported net
income of P75,000, sold treasury shares at a “gain” of P27,000, declared a cash dividend of P45,000, and declared and issued a small
share dividend of 1,500 shares (P10 par value) when the fair value of the shares was P30 per share. The amount of retained earnings
available for dividends at the end of 2026 was:
Answer:
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Question 12
Not answered
Marked out of 1.00
Computational | ABC Co. was organized on January 2, 2023, with 500,000 authorized shares of P10 par value ordinary shares. During
2023, ABC had the following capital transactions: January 5—issued 375,000 shares at P14 per share. July 27—purchased 25,000
shares at P11 per share. November 25—sold 15,000 shares of treasury shares at P13 per share. ABC used the cost method to record
the purchase of the treasury shares. What would be the balance in the Share Premium—Treasury account at December 31, 2023?
(ignore currency unit)
Answer:
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Question 13
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Computational | ABC Corp. owned 20,000 shares of XYZ Corp. purchased in January 1, 2025 for P340,000. These shares are accounted
under the cost method. On December 15, 2025, ABC declared a property dividend of all of its XYZ Corp. shares on the basis of one
share of XYZ for every 10 ordinary shares of ABC held by its shareholders. The property dividend was distributed on January 15, 2026.
On the declaration date, the aggregate market price of the XYZ shares held by ABC was P400,000 while on the reporting period,
P350,000. At the reporting period, the dividends payable and the asset held for dividend distribution shall be reported respectively at
(ignore currency unit, use a space semi-colon and space to separate the required answers; such as 47,000 ; 65,500)
Answer:
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Question 14
Correct
Mark 1.00 out of 1.00
MCQ | Evaluate the following statements carefully:
S1. Generally, subscription receivable is presented under the asset section of the balance sheet.
S2. Legal capital may include share premium.
S3. Legal capital shall exclude the cost of the treasury shares.
a. True, True, False
b. False, False, False
c. False, True, False

d. True, True, True
e. False, True, True
f. True, False, True
Question 15
Incorrect
Mark 0.00 out of 1.00
MCQ | Evaluate the following statements carefully:
S1. At the date of declaration of an ordinary share dividend, the entry should not include credit to Share Capital—Ordinary.
S2. The declaration and issuance of a share dividend increases ordinary shares outstanding and increases total equity.
S3. ABC Corporation owns 4,000,000 shares of XYZ Corporation. On December 31, 2023, ABC distributed these shares as a dividend to
its shareholders. This is an example of a share dividend.
a. True, False, True
b. True, True, False
c. True, True, True
d. False, False, False

e. True, False, False
f. False, True, True
g. False, False, True
h. False, True, False
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Question 16
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Computational | On July 1, 2023, ABC Co. issued 2,500 shares of its P10 par ordinary shares and 5,000 shares of its P10 par
redeemable preference shares for a lump sum of P125,000. At this date ABC’s ordinary shares were selling for P24 per share and the
convertible preference shares for P18 per share. The amount of the proceeds allocated to ABC’s preference shares should be (ignore
currency unit)
Answer:
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Question 17
Not answered
Marked out of 1.00
Computational | Rensing, Inc., has P800,000 of 8% preference shares and P1,200,000 of ordinary shares outstanding, each having a par
value of P10 per share. No dividends have been paid or declared during 2024 and 2025. As of December 31, 2026, it is desired to
distribute P488,000 in dividends. How much will the preference and ordinary shareholders, respectively receive if the preference is
cumulative and fully participating? (ignore currency unit, use a space semi-colon and space to separate the required answers; such as
47,000 ; 65,500)
Answer:
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Question 18
Incorrect
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MCQ | Evaluate the following statements carefully:
S1. The pre-emptive right of an ordinary shareholder is the right to share proportionately in corporate assets upon liquidation.
S2. The pre-emptive right of an ordinary shareholder is the right to receive cash dividends before they are distributed to preference
shareholders.
S3.The issuer of an ordinary share dividend to ordinary shareholders should transfer from retained earnings to contributed capital an
amount equal to the fair value of the shares issued, at all times.
a. False, False, True

b. True, True, True
c. False, False, False
d. False, True, False
e. True, False, True
f. False, True, True
g. True, True, False
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Question 19
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Computational | An analysis of equity of ABC Corporation as of January 1, 2023, is as follows:
Share capital—ordinary, par value P20; authorized 100,000 shares; issued and outstanding 90,000 shares - P1,800,000
Share premium—ordinary - 900,000
Retained earnings - 760,000
ABC uses the cost method of accounting for treasury shares and during 2023 entered into the following transactions:
Acquired 2,500 of its shares for P75,000.
Sold 2,000 treasury shares at P35 per share.
Sold the remaining treasury shares at P20 per share.
Assuming no other equity transactions occurred during 2023, what should ABC report at December 31, 2023, as total share premium?
(ignore currency unit)
Answer:
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Question 20
Incorrect
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MCQ | If two classes of shares (S1 and S2) were issued in a single transaction, the total issue price shall be

a. allocated to S1 first even S2’s fair value can be determined reliably
b. allocated between S1 and S2 (redeemable preference shares) in proportion to their relative fair value.
c. allocated between S1 and S2 based on the par value of the shares
d. allocated to S2 first if it is redeemable preference shares even if S1’s fair value can be reliably measured.
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