Failure to Record the Declaration and Distribution of a Share

question 81

Multiple Choice

Failure to record the declaration and distribution of a share dividend would:

• A) Have no effect on total equity.
• B) Cause the outstanding shares to exceed the equity.
• C) Cause an understatement of equity.
• D) Cause an overstatement of equity.
• E) Cause the balance sheet to be out of balancE.

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Definitions:

Inventories

Items held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process.

Useful Life

The period over which an asset is expected to be usable by an entity, affecting its depreciation or amortization.

Straight-line Method

A method of calculating depreciation of an asset where the cost is evenly allocated over its useful life, resulting in a consistent expense each period.

Accounting Standards

Rules and guidelines set by authoritative bodies that dictate how financial transactions and statements should be reported and maintained.