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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following statement is correct in relation to the balance of retained earnings? A) it is increased by transfers to reserves C) it is decreased by transfers from reserves B) it is increased by dividend distributions D) it is increased by transfers from reserves 2) Retained earnings represent: A) the undistributed profits of the company B) the previously distributed profits of the company C) the profits of a company distributed to shareholders in the current year D) none of the above 3) 4) Total comprehensive income comprises all components of: A) profit or loss and other comprehensive income B) assets and liabilities C) revenue and expenses D) none of the above 5) The dividend determined at the end of the financial year is known as the B) first dividend D) final dividend A) last dividend C) interim dividend 6) Disclosure rules for reporting changes in shareholders' equity are contained in the A) statement of cash flows C) statement of comprehensive income B) statement of changes in equity D) statement of financial position 7) One of the main principles of the Corporations Act 2001 has been the protection of those dealing with the company including: A) the creditors C) the employees B) the shareholders D) all of the above 8) 9) An appropriation of profits to satisfy the shareholders'entitlement to receive a portion of the profits is commonly known as a/an: A) asset B) dividend C) expense 10) Dividends are usually recommended by the: A) creditors B) employees C) shareholders D) directors 12) Under recent amendments to the Corporations Act, a company may now pay dividends when: A) the payment is fair and reasonable to the company's shareholders as a whole B) the dividend will not materially prejudice the company's ability to pay its creditors C) the company's assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend D) all of the above 13) What is the process of incorporating in the statement of financial position or the statement of comprehensive income an item that meets the definition and recognition criteria of an element known as

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