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Accounting Quiz!




Question;Chapter 17 QUIZ?Earnings Per Share and;Retained Earnings;MULTIPLE CHOICE;QUESTION;# 1;1. Which;one of the following indicators is intended to show the potential impacts of;possible future events on a corporation's performance?;a.;basic earnings per share;b.;cash flow per share;c.;diluted earnings per share;d.;price/earnings ratio;QUESTION;# 2;6. Basic;earnings per share is computed as;a.;Net Income / Total Number of;Common Shares Outstanding;b.;(Net Income- Preferred Dividends) / Total Number of Common Shares;Outstanding;c.;(Net Income- Preferred Dividends) / Weighted-Average Number of Common Shares;Outstanding;d.;Net Income / Weighted-Average;Number of Common Shares Outstanding;QUESTION;# 3;8. Which;of the following items would not be included in a basic earnings per;share calculation?;a.;undeclared dividends on;noncumulative preferred stock;b.;declared dividends on;noncumulative preferred stock;c.;undeclared dividends on;cumulative preferred stock;d.;declared dividends on;cumulative preferred stock;QUESTION;# 4;9. On;January 1, 2010, Walters Corporation had 24,000 shares of common stock;outstanding. On April 1, it reacquired 2,400 shares, on July 1, it issued;10,800 shares, on October 1, it issued another 9,600 shares, and on December 1;it reacquired 600 shares. The weighted average number of common shares;outstanding for 2010 was;a.;26,950;b.;28,900;c.;29,950;d.;41,400;QUESTION;# 5;10. On;January 1, 2010, Brennen Corporation had 20,000 shares of common shares;outstanding. During the year, it sold another 2,600 shares on July 1 and;reacquired 600 shares on November 1. The corporation earned $337,600 net;income. The company also has 15,000 shares of $10 par value, 6%, cumulative;preferred stock on which no dividends have been declared for the last two;years. The basic earnings per share for the year is;a.;$15.92;b.;$15.65;c.;$15.50;d.;$15.08;QUESTION;# 6;12. On;January 1, a corporation had 10,380 shares of common stock outstanding. On;August 1, it sold an additional 6,000 shares. During the year, dividends of;$4,800 and $56,000 were declared and paid on the common and preferred stock;respectively. Net income for the year was $240,000. The basic earnings per;share for the year was;a.;$10.56;b.;$11.23;c.;$14.29;d.;$18.63;QUESTION;# 7;13. On;January 1, 2010, a corporation had 10,380 shares of common stock outstanding;and on June 1, it reacquired 6,000 shares. Despite a net loss for the year of;$180,000, the company declared and paid cash dividends of $24,000 and $28,000;on common and preferred stock, respectively. The earnings per share for 2010;was;a.;($33.72);b.;($30.24);c.;($22.10);d.;($18.60);QUESTION;# 8;15. On;January 1, 2010, Smith Company had 21,000 shares of common stock outstanding;and issued an additional 4,500 shares on May 1. The company declared and paid a;cash dividend of $30,000 and earned $330,000 net income. The earnings per share;for the year was;a.;$15.00;b.;$13.75;c.;$12.94;d.;$12.50;QUESTION;# 9;16. Common;shares outstanding are increased as a result of a stock dividend or stock;split. For purposes of calculating the earnings per share, when is the stock;dividend or stock split considered to have occurred?;a.;at the beginning of the;earliest comparative period for which earnings per share information is;presented;b.;at the end of the earliest;comparative period for which earnings per share information is presented;c.;at the beginning of the year;declared;d.;as of the date of declaration;QUESTION;# 10;17. On;January 1, a corporation had 20,000 shares of common stock outstanding. An;additional 4,000 shares were issued on July 1, and on November 1, the company;declared a 3-for-1 stock split. The denominator in the earnings per share;calculation would be;a.;36,000;b.;56,000;c.;66,000;d.;72,000;QUESTION;# 11;18. On;January 1, a corporation had 60,000 shares of common stock outstanding. On;March 1, the company reacquired 12,000 shares, and it declared a 10% stock;dividend on October 1. The denominator in the earnings per share calculation;would be;a.;44,200;b.;40,800;c.;55,000;d.;60,000;QUESTION;# 12;22. Reporting;diluted earnings per share is required for which type of corporate capital structure?;a.;simple;b.;complex;c.;diluted;d.;primary;QUESTION;# 13;25. The;potential dilutive effect of the exercise of stock options or warrants will;affect which of the following when calculating diluted earnings per share?;a.;the earnings per share;numerator;b.;the earnings per share;denominator;c.;both the numerator and the;denominator;d.;neither the numerator nor the;denominator;QUESTION;# 14;27. Dual;presentation of the basic and diluted earnings per share amounts is;a.;required for corporations;with simple capital structures;b.;optional for corporations;with simple capital structures;c.;optional for corporations of;any structure;d.;required for corporations;with complex capital structures;QUESTION;# 15;29. Smock;Corporation had 30,000 shares of common stock outstanding during the year. In;addition, there were compensatory stock options to purchase 3,000 shares of;common stock at $20 a share outstanding the entire year. The average market;price for the common stock during the year was $36 a share. The unrecognized;compensation cost (net of tax) relating to these options was $4 a share. The;denominator to compute the diluted earnings per share is;a.;31,000;b.;31,333;c.;31,667;d.;33,000;QUESTION;# 16;30. Under;the treasury stock method, the number of shares of common stock assumed to be;reacquired is determined by using the;a.;ending market price of the;stock;b.;average market price of the;stock;c.;beginning market price of the;stock;d.;par value of the stock;QUESTION;# 17;31. The;assumed conversion of convertible debt and preferred stock in diluted earnings;per share calculations affects;a.;the numerator only;b.;the denominator only;c.;both the numerator and;denominator;d.;neither the numerator nor the;denominator;QUESTION;# 18;34. In;the determination of the diluted earnings per share, convertible securities are;a.;included if they are dilutive;b.;included whether they are;dilutive or not;c.;included if they are;antidilutive;d.;not included;QUESTION;# 19;35. Interest;expense on convertible bonds that are dilutive is included in the numerator of;the diluted earnings per share calculation at an amount equal to;a.;interest expense;b.;interest payable;c.;interest expense times the;tax rate;d.;interest expense times one;minus the tax rate;QUESTION;# 20;36. The;term deficit in financial accounting means;a.;net loss;b.;a negative retained earnings;balance;c.;a negative cash balance;d.;a negative stockholders;equity total;QUESTION;# 21;37. How;will a company's working capital and net income be affected by the recording of;a cash dividend on the declaration date? (Assume the dividend is paid on a;later date.);Working Capital;Net Income;I.;decrease;decrease;II.;decrease;no effect;III.;no effect;no effect;IV.;no effect;decrease;a.;I;b.;II;c.;III;d.;IV;QUESTION;# 22;45. The;Carol Company has issued 10%, fully participating, cumulative preferred stock;with a total par value of $600,000 and common stock with a total par value of;$900,000. No dividends are in arrears. How much cash will be paid to the;preferred stockholders and the common stockholders, respectively, if cash;dividends of $141,000 are distributed?;a.;$ 60,000 and $90,000;b.;$114,000 and $27,000;c.;$ 51,000 and $90,000;d.;$ 60,000 and $81,000;QUESTION;# 23;46. The;Farmer Company has issued 10%, fully participating, cumulative preferred stock;with a total par value of $300,000 and common stock with a total par value of $900,000.;Dividends for one previous year are in arrears. How much cash will be paid to;the preferred stockholders and the common stockholders, respectively, if cash;dividends of $222,000 are distributed at the end of the current year?;a.;$85,500 and $136,500;b.;$78,000 and $144,000;c.;$60,000 and $162,000;d.;$55,500 and $166,500;QUESTION;# 24;49. On;November 1, 2010, the Metal Construction Company declared a property dividend;payable in the form of bonds held for long-term investment purposes. The bonds;will be distributed to the common stockholders on December 15, 2010. The bonds;to be distributed to the common stockholders originally cost Metal $210,000.;Fair value of the bonds on various dates is as follows;December 31, 2009;$220,000;November 1, 2010;225,000;December 15, 2010;230,000;Which one of the following;amounts should be used to record the appropriate credit to Property Dividends;Payable?;a.;$210,000;b.;$220,000;c.;$225,000;d.;$230,000;QUESTION;# 25;51. How;will a company's total current liabilities and total stockholders' equity be;affected by the declaration of a stock dividend? (Assume the stock dividend is;distributed at a later date.);Total;Total;Current Liabilities;Stockholders' Equity;I.;increase;decrease;II.;increase;no effect;III.;no effect;decrease;IV.;no effect;no effect;a.;I;b.;II;c.;III;d.;IV;Exhibit 17-1;The Zoeller Corporation's;stockholders' equity accounts have the following balances as of December 31;2010;Common stock, $10 par (30,000;shares issued;and outstanding);$ 300,000;Additional paid-in capital;2,000,000;Retained earnings;5,700,000;Total stockholders' equity;$8,000,000;QUESTION;# 26;52. Refer;to Exhibit 17-1. On January 2, 2011, the board of directors of Zoeller declared;a 30% stock dividend to be distributed on January 31, 2011. The market price;per share of Zoeller's common stock was $30 on January 2 and $32 on January 31.;As a result of this stock dividend, the retained earnings account should be decreased;by;a.;$ 90,000;b.;$270,000;c.;$288,000;d.;zero, only a memorandum entry;is required;QUESTION;# 27;54. The;Martin Company's stockholders' equity accounts have the following balances as;of December 31, 2010;Common stock, $20 par (25,000;shares issued of which;2,000 are being held as treasury stock);$ 500,000;Additional paid-in capital;750,000;Retained earnings;2,250,000;$3,500,000;Less: Treasury stock (2,000;shares at cost);(120,000);Total stockholders' equity;$3,380,000;On January 2, 2011, the board;of directors of Martin declared a 10% stock dividend to be distributed on;February 15, 2011. The market price of Martin Company's common stock was $65;per share on January 2, 2011. On the date of declaration, the retained earnings;account should be decreased by;a.;zero, only a memorandum entry;is required;b.;$ 50,000;c.;$149,500;d.;$162,500;QUESTION;# 28;55. A;dividend that represents a return of capital rather than a distribution of;retained earnings is called a;a.;property dividend;b.;stock dividend;c.;capital dividend;d.;liquidating dividend;QUESTION;# 29;56. When;a company is determining its dividend policy, the company must adhere to legal;requirements. The legal requirements are determined by the;a.;Financial Accounting;Standards Board (FASB);b.;state in which the company;was incorporated;c.;Securities and Exchange;Commission (SEC);d.;Federal Trade Commission;(FTC);QUESTION;# 30;57. If;a company makes a prior period adjustment, which of the following describes how;it must be reported?;a.;The adjustment is recorded in;retained earnings, and previous years' financial statements presented for;comparative purposes are not changed.;b.;The adjustment is recorded in;retained earnings, and previous years' financial statements presented for;comparative purposes are adjusted.;c.;The adjustment is reported in;the current period's income statement as a separate item.;d.;The adjustment is recorded as;a deferred asset or deferred liability and amortized using the straight-line;method.;QUESTION;# 31;60. Which;of the following could be a component of other comprehensive income (loss)?;a.;realized gains or losses from;sale of investments in available-for-sale securities;b.;translation adjustments from;converting the financial statements of a company's foreign operations into;U.S. dollars;c.;gains (losses) on;extraordinary items;d.;warranty liability;adjustments;QUESTION;# 32;61. How;may a corporation report its types of comprehensive income?;a.;It may report the amount of;accumulated other comprehensive income for each item as part of stockholders;equity.;b.;It may report the total;amount of accumulated other comprehensive income for all the items as part of;stockholders' equity.;c.;It may make footnote;disclosures of totals only.;d.;It may report the amount of;accumulated other comprehensive income for each item or in total as part of;stockholders' equity.;QUESTION;# 33;63. The;following information is provided for the Columbus Company;Deferred compensation;payable-stock appreciation rights;$ 10;Bonds payable;120;Additional paid-in capital on;common stock;20;Donated capital;16;Treasury stock (at cost);8;Common stock, $1 par;100;Common stock option warrants;40;Unrealized increase in value;of available for sale securities;28;Additional paid-in capital;from treasury stock;3;Retained earnings;57;What is the total stockholders;equity of Columbus Company?;a.;$212;b.;$228;c.;$256;d.;$272;e.;none of these;QUESTION;# 34;65. When;recording the receipt of donated assets, the credit could be to;a.;Retained Earnings;b.;Donated Capital;c.;Gain on Donations;d.;a contra account to the asset;QUESTION;# 35;67. Which;of the following stockholders' equity disclosures are required under both GAAP;and IFRS?;a.;capital not yet paid in;b.;restrictions on the repayment;of capital;c.;dividend preferences;d.;shares reserved for future;issuances under sales contracts;QUESTION;# 36;68. The;two defined sections of stockholders' equity under IFRS are;a.;contributed capital and other;equity;b.;share capital and retained;earnings;c.;contributed capital and;retained earnings;d.;share capital and other;equity;QUESTION;# 37;69. Differences;exist between IFRS and GAAP in the reporting of EPS. Which of the following;areas is not an area of difference?;a.;adjustment in options;calculations for unrecognized compensation cost;b.;treatment of unvested;contingently issued shares;c.;treatment of dividends in;arrears for convertible preferred stock;d.;treatment of contracts that;may be settled in shares or for cash;QUESTION;# 38;70. Specific;EPS disclosure is regularly reported for extraordinary items under;IFRS;GAAP;I.;yes;no;II.;no;yes;III.;yes;yes;IV.;no;no;a.;I;b.;II;c.;III;d.;IV


Paper#44783 | Written in 18-Jul-2015

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