MUHASEBE II

Retained earnings is the amount earned through profitable operations of corporations and that is kept in the corporation?

If a corporation wants to pay cash dividends, three conditions required are as follows:

1. Sufficient retained earnings
2. Adequate cash
3. Declared dividends by the board of directors

The correct answer is E.

The preferred dividend = Outstanding preferred shares x Par value x Preferred dividend rate

50,000 x 15 x 7% = 52,500 TL

The correct answer is D.

The preferred dividend = Outstanding preferred shares x Par value x Preferred dividend rate

77,000 x 12 x 13% = 120,120 TL

Share dividend is a distribution of a corporation’s own shares to the shareholders as dividends. The correct answer is C.

Return on Equity is a measure of a corporation’s profitability that presents how much profit it generates with each item (TL) of shareholders’ equity. The correct answer is E.

Return Equity=Net Income/Average shareholders' equity

The correct answer is A.

A Comprehensive income is all changes in the shareholders’ equity from all sources except owners’ investments and dividends. The correct answer is C.

Statement of shareholders’ equity is a financial report that represents the details about the changes in shareholders’ equity for a period of time. The correct answer is B.

Book value per share represents the amount of the owner’s equity on the corporation’s books for each common share. The correct answer is B.

The term "Retained Earnings" represents the amount earned through profitable operations of a corporation and that is kept in the corporation. The correct answer is D.

Dividends are distributions of cash, other property, or share of the business to the shareholders of a corporation on a pro rata (proportional to ownership) basis. In other words, a dividend is a distribution of some portion of earnings to the shareholders by a corporation. The correct answer is D.

If a corporation wants to pay cash dividends, three conditions required are as follows: 1. Sufficient retained earnings 2. Adequate cash 3. Declared dividends by the board of directors. The correct answer is C.

Usually, the dividend rate on preferred shares is expressed as a percentage of preferred share par value (such as 5%) on the certificate.

The preferred dividend is calculated as follow: The preferred dividend = Outstanding preferred shares x Par value x Preferred dividend rate

50,000 x 10 x 5% = 25,000 TL

Then the common dividend amount is calculated just by subtracting the preferred dividend. Then the remaining amount will be the common share dividend amount:

200.000- 40.000 = 160.000

The second popular way to distributing dividends to the shareholders is to share dividends. In this case, the distributed item is different than cash dividends. Share dividend is a distribution of a corporation’s own shares to the shareholders as dividend. The correct answer is C.

A Comprehensive income is all changes in the shareholders’ equity from all sources except owners’ investments and dividends.Comprehensive income components are as follows:14 • Unrealized gains or losses • Foreign-currency translation adjustments • Gains (losses) from post-retirement benefit plans • Deferred gains (losses) derivatives. The correct answer is A.

By some ratios, the relationship between shareholders’ equity items, their positions, results, and effects can be understood clearly. Thus the information on the financial statements can be used in some decision making processes.One of the ratios that is used for analysis is the Return on Equity (ROE). It measures a corporation’s profitability by presenting how much profit it generates with each item (TL) of shareholders’ equity. The correct answer is B.

Book value per share ratio is used to calculate the per share value of a corporation. In other words, it represents the amount of the owner’s equity on the corporation’s books for each common share. The correct answer is A.

Large share dividends: These are the dividends which are greater than 20%–25% of the corporation’s issued shares. These types of dividends are rare. But, if a corporation decides on a large share dividend, par value or stated value should be used to record related transactions instead of market value because of the possible important effect of this transaction on the market price of the shares. The correct answer is B.