11 aye corp sells common shares on a subscription basis the common shares account sh 4314600

11.Aye Corp. sells common shares on a subscription basis. The Common Shares account should be credited when the

a) shares are subscribed for.

b) first payment is made.

c) last payment is made.

d) last payment is made and the shares are issued.

12. Subscriptions Receivable are reported as

a) a non-currentasset.

b) a currentasset.

c) a deduction from shareholders' equity.

d) either a current asset or a deduction from shareholders' equity.

13.The accounting problem in a lump sum sale of shares is the allocation of the proceeds between the classes of securities. One acceptable method of allocation is the

a) pro forma method.

b) relative fair value method.

c) directmethod.

d) indirect method.

14.Direct incremental costs incurred to sell shares such as underwriting costs should be accounted for as

a) a reduction of share capital.

b) an expense of the period in which the shares are issued.

c) an intangible asset.

d) a reduction of retained earnings.

15.According to the CBCA, when a company purchases its own shares on the market

a) they are recorded with a debit to Repurchased Shares.

b) the amount paid is deducted from the share class to which they belong.

c) they must be cancelled.

d) the excess of purchase price over cost is a loss.

16.When shares are reacquired at a cost less than the average per share value, the difference is credited to

a) theappropriate share capital account.

b) Gain on Reacquisition of Shares.

c) Retained Earnings.

d) Contributed Surplus.

17.Assuming a corporation has no contributed surplus booked, when shares are reacquired at a cost greater than their original issue price and cancelled, what account(s) should be debited?

a) the share account for the total cost

b) the share account for the original issue price and contributed surplus for the additional amount

c) the share account for the average per share amount and retained earnings for the additional amount

d) the share account for the average per share amount and a loss account for the additional amount

18.When shares are purchased or redeemed and cancelled, guidelines have been established for the sequence of accounts to adjust when allocating the cost. Which of the following is the first account to be adjusted?

a) aContributed Surplus account created from a previous reacquisition of the same class of shares

b) theShare Capital account

c) Retained Earnings

d) Accumulated Other Comprehensive Income

19.A possible result of the reacquisition and cancellation of shares by a corporation is that this may

a) directly increase but not decrease retained earnings.

b) increase net income if a gain is recognized.

c) directly decrease but not increase retained earnings.

d) decrease but not increase net income.

20.When all outstanding preferred shares are purchased and retired by the issuing corporation for less than the original issue price, accounting for the retirement increases

a) the amount of dividends available to common shareholders.

b) the contributed capital of the common shareholders.

c) reported income for the period.

d) Accumulated Other Comprehensive Income.