Using your textbooks and lectures, please answer the following:

1. In the absence of restrictive provisions, what are the basic rights of shareholders of a corporation?

2. Why is a preemptive right important?

3. Distinguish between ordinary and preference shares.

4. Why is the distinction between contributed capital (paid-in capital) and retained earnings important?

5. Explain each of the following terms: authorized ordinary shares, unissued ordinary shares, issued ordinary

shares, outstanding ordinary shares, and treasury shares.

6. What is meant by par value, and what is its significance to shareholders?

7. Describe the accounting for the issuance for cash of no-par value ordinary shares at a price in excess of the stated value of the ordinary shares.

8. Explain the difference between the proportional method and the incremental method of allocating the proceeds of lump-sum sales of share capital.

9. What are the different bases for share valuation when assets other than cash are received for issued shares?

10. Explain how underwriting costs and accounting and legal fees associated with the issuance of shares should be recorded.

11. For what reasons might a company purchase its own shares?

12. Discuss the propriety of showing:

a. Treasury shares as an asset. b. "Gain" or "loss" on sale of treasury shares as additions to or deductions from income.

c. Dividends received on treasury shares as income.

13. What features or rights may alter the character of preference shares?

14. Kim Inc. recently noted that its 4% preference shares and 4% participating preference shares are both cumulative and have priority as to dividends up to 4% of their par value. Its participating preference shares participate equally with the ordinary shares in any dividends in excess of 4%. What is meant by the term participating? Cumulative?

15. Where in the financial statements are preference shares normally reported?

16. List five elements included in equity.

17. BMG purchases 10,000 shares of its own previously issued 10 par ordinary shares for 290,000. Assuming the shares are held in the treasury with intent to reissue, what effect does this transaction have on (a) net income, (b) total assets, (c) retained earnings, and (d) total equity?

18. Indicate how each of the following accounts should be classified in the Equity section.

a. Share CapitalOrdinary b. Retained Earnings c. Share PremiumOrdinary

d. Treasury Shares e. Share PremiumTreasury f. Accumulated Other Comprehensive Income g. Share CapitalPreference

19. Describe the corporate form and the issuance of shares.

20.Indicate how to present and analyze equity.