Reference no: EM132704393

Question 1: How many of the transactions below does not affect the balance of accumulated profits?

I. share split II. appropriation for plant expansion III. conversion of preference shares to ordinary shares where the original issue price of preference shares is greater than the aggregate par value of ordinary shares. IV. Retirement of treasury shares below par value *

A. 0

b. 1

C. 2

D. 3

E. 4

Question 2: What does appropriation of retained earnings (R/E) and declaration of cash dividend have in common?

a. both increase the amount of appropriated R/E

b. both have the same consequences for shareholders

c. both result in a decrease in unappropriated R/E

d. both permanently reduce future ability to pay dividends

e. none of the above