Question 1

A basic earnings per share figure is presented for:

Accepted Answer

A)  A complex capital structure. 
B)  A simple capital structure. 
C)  Both simple and complex structures. 
D)  Neither simple nor complex structures. 
A)  A complex capital structure. 
B)  A simple capital structure. 
C)  Both simple and complex structures. 
D)  Neither simple nor complex structures.

Question 2

On January 1,2012,JMR had 30,000 common shares issued and outstanding.On July 1,JMR sold 500 shares.The net income for the year was $300,000.Calculate the basic earnings per share.

Accepted Answer

EPS = 300,

Question 3

Convertible noncumulative preferred stock for which the current year's dividend has not been declared does not affect the EPS figures if it:

Accepted Answer

A)  Has been converted. 
B)  Is anti-dilutive. 
C)  Is a common convertible security. 
D)  None of these choices are correct. 
A)  Has been converted. 
B)  Is anti-dilutive. 
C)  Is a common convertible security. 
D)  None of these choices are correct.

Question 4

Options are in-the-money if the exercise price is higher that the market value of common shares.

Accepted Answer

A) True 
 B)False

Question 5

When shares are issued by a parent company as consideration for the acquisition of a wholly owned subsidiary,the parent's EPS figures will always decline in the short term.This is because the subsidiary's earnings will only be added to the parent's earnings in the following period.

Accepted Answer

A) True 
 B)False

Question 6

Anti-dilutive convertible securities would generally be used in the calculation of:

Accepted Answer

A)  Basic earnings per share. 
B)  diluted earnings per share. 
C)  Basic earnings per share and diluted earnings per share. 
D)  Neither basic earnings per share nor diluted earnings per share. 
A)  Basic earnings per share. 
B)  diluted earnings per share. 
C)  Basic earnings per share and diluted earnings per share. 
D)  Neither basic earnings per share nor diluted earnings per share.

Question 7

The annual dividend on nonconvertible cumulative preferred shares is $10,000.At the beginning of the current year,there were 3 years of dividends in arrears.During the current year,$38,000 of dividends on the preferred shares were declared,and $35,000 were paid.What amount of dividends on preferred shares will be subtracted from earnings when computing diluted EPS for the current year?

Accepted Answer

A)  $40,000 
B)  $10,000 
C)  $38,000 
D)  $35,000 
E)  $30,000 
A)  $40,000 
B)  $10,000 
C)  $38,000 
D)  $35,000 
E)  $30,000

Question 8

Transactions that take place in the period between the end of the fiscal year and the financials statement released must be disclosed and described when which of the following happens:

Accepted Answer

A)  When a subsequent event would significantly change the number of common shares or the potential common shares used in basic or diluted EPS. 
B)  When common shares are issued after the fiscal year end and the proceeds were used to retire preferred shares. 
C)  When common shares are issued after the fiscal year end for cash, on the exercise of options. 
D)  All of these choices are correct. 
A)  When a subsequent event would significantly change the number of common shares or the potential common shares used in basic or diluted EPS. 
B)  When common shares are issued after the fiscal year end and the proceeds were used to retire preferred shares. 
C)  When common shares are issued after the fiscal year end for cash, on the exercise of options. 
D)  All of these choices are correct.

Question 9

PPO Inc.discloses the following results and information at the end of the current year: What are PPO's earnings per common share for the current year? (Rounded to the nearest cent.)

Accepted Answer

A)  $1.50 
B)  $6.00 
C)  $2.00 
D)  $8.00 
A)  $1.50 
B)  $6.00 
C)  $2.00 
D)  $8.00

Question 10

A firm has correctly computed the following values: (Its shares are trading on the Vancouver Stock Exchange) Which of the following correctly states the EPS amounts to be reported?

Accepted Answer

A)  Basic EPS 
B)  Diluted EPS 
C)  Basic and diluted EPS 
D)  No EPS need be reported 
A)  Basic EPS 
B)  Diluted EPS 
C)  Basic and diluted EPS 
D)  No EPS need be reported

Question 11

Nonconvertible,cumulative,preferred shares affect the computation of EPS (for a simple capital structure),basic EPS,but not diluted EPS.

Accepted Answer

A) True 
 B)False

Question 12

When different classes of common shares exist,a separate calculation of EPS is required for each class of common shares when dividend privileges differ by share class.

Accepted Answer

A) True 
 B)False

Question 13

ABC Inc.began business on January 1,2014.Due to difficulties in getting the business started,30 common shares were issued on January 1,2014 to the organizers and 15 additional shares were sold on that date.The company wanted the market to hear about the shares.Therefore,the following share transactions were implemented during the year 2014: February 1: 2 for 1 stock split
April 1: 10 percent stock dividend
August 1: 5 for 1 stock split
December 1: 2 for 1 reverse stock split
The weighted average number of shares outstanding for 2014 was: (Rounded to the nearest whole number)

Accepted Answer

A)  64 shares. 
B)  146 shares. 
C)  180 shares. 
D)  248 shares. 
A)  64 shares. 
B)  146 shares. 
C)  180 shares. 
D)  248 shares.

Question 14

FED had 100 common shares issued and outstanding at December 31,2013.On July 1,2014,FED issued a 10 percent stock dividend.Unexercised stock options to purchase 20 common shares (adjusted for 2014 stock dividend)at $20 per share were outstanding at the beginning and end of 2014.The average market price of FED'S common shares (which was not affected by the stock dividend)was $25 per share during 2014.The ending market price was $40.FED earned interest at 8% and had a 50% tax rate.Net income for the year ended December 31,2014,was $2,200.What was FED'S 2014 diluted earnings per share,rounded to the nearest cent?

Accepted Answer

A)  $17.05 
B)  $17.17 
C)  $18.47 
D)  $18.60 
A)  $17.05 
B)  $17.17 
C)  $18.47 
D)  $18.60

Question 15

Where there are significant changes in a corporation's capital structure after year end but before the financial statement date,the transaction must be disclosed and described.

Accepted Answer

A) True 
 B)False

Question 16

A simple capital structure could have,in addition to common shares,a security that is a:

Accepted Answer

A)  Stock right. 
B)  Stock warrant. 
C)  Convertible preferred shares. 
D)  Convertible bond. 
E)  Nonconvertible preferred shares. 
A)  Stock right. 
B)  Stock warrant. 
C)  Convertible preferred shares. 
D)  Convertible bond. 
E)  Nonconvertible preferred shares.

Question 17

DCE had 900 common shares outstanding on January 1,2014,issued 600 shares on May 1 and had income applicable to common shares of $5,200 for the year ending December 31,2014.Earnings per common share for 2014 would be: (Rounded to the nearest cent)

Accepted Answer

A)  $5.78 
B)  $4.00 
C)  $3.60 
D)  $3.46 
A)  $5.78 
B)  $4.00 
C)  $3.60 
D)  $3.46

Question 18

On January 1,2012,KAR had 60,000 common shares issued and outstanding.On July 1,KAR sold 1,000 shares.KAR The net income for the year was $80,000.Calculate the basic earnings per share.

Accepted Answer

EPS = 80,0

Question 19

Choose the correct statement concerning EPS.

Accepted Answer

A)  Usually, reported EPS is the actual historical income per weighted average share outstanding during the period. 
B)  EPS can never be negative. 
C)  If net income is less than zero, all potentially dilutive securities are anti-dilutive. 
D)  All convertible securities must be incorporated into diluted EPS. 
A)  Usually, reported EPS is the actual historical income per weighted average share outstanding during the period. 
B)  EPS can never be negative. 
C)  If net income is less than zero, all potentially dilutive securities are anti-dilutive. 
D)  All convertible securities must be incorporated into diluted EPS.

Question 20

The classification of a security as a convertible security should be based on information available at the time:

Accepted Answer

A)  The security would be the most dilutive. 
B)  The security would be the most anti-dilutive. 
C)  The EPS calculation is made each year. 
D)  The security is issued. 
A)  The security would be the most dilutive. 
B)  The security would be the most anti-dilutive. 
C)  The EPS calculation is made each year. 
D)  The security is issued.

A basic earnings per share figure is presented for:

On January 1,2012,JMR had 30,000 common shares issued and outstanding.On July 1,JMR sold 500 shares.The net income for the year was $300,000.Calculate the basic earnings per share.

Convertible noncumulative preferred stock for which the current year's dividend has not been declared does not affect the EPS figures if it:

Options are in-the-money if the exercise price is higher that the market value of common shares.

When shares are issued by a parent company as consideration for the acquisition of a wholly owned subsidiary,the parent's EPS figures will always decline in the short term.This is because the subsidiary's earnings will only be added to the parent's earnings in the following period.

Anti-dilutive convertible securities would generally be used in the calculation of:

Transactions that take place in the period between the end of the fiscal year and the financials statement released must be disclosed and described when which of the following happens:

PPO Inc.discloses the following results and information at the end of the current year: What are PPO's earnings per common share for the current year? (Rounded to the nearest cent.)

A firm has correctly computed the following values: (Its shares are trading on the Vancouver Stock Exchange) Which of the following correctly states the EPS amounts to be reported?

Nonconvertible,cumulative,preferred shares affect the computation of EPS (for a simple capital structure),basic EPS,but not diluted EPS.

When different classes of common shares exist,a separate calculation of EPS is required for each class of common shares when dividend privileges differ by share class.

Where there are significant changes in a corporation's capital structure after year end but before the financial statement date,the transaction must be disclosed and described.

A simple capital structure could have,in addition to common shares,a security that is a:

DCE had 900 common shares outstanding on January 1,2014,issued 600 shares on May 1 and had income applicable to common shares of $5,200 for the year ending December 31,2014.Earnings per common share for 2014 would be: (Rounded to the nearest cent)

On January 1,2012,KAR had 60,000 common shares issued and outstanding.On July 1,KAR sold 1,000 shares.KAR The net income for the year was $80,000.Calculate the basic earnings per share.

Choose the correct statement concerning EPS.

The classification of a security as a convertible security should be based on information available at the time:

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

Exam 9: Long-Lived Assets

A basic earnings per share figure is presented for:

On January 1,2012,JMR had 30,000 common shares issued and outstanding.On July 1,JMR sold 500 shares.The net income for the year was $300,000.Calculate the basic earnings per share.

Convertible noncumulative preferred stock for which the current year's dividend has not been declared does not affect the EPS figures if it:

Options are in-the-money if the exercise price is higher that the market value of common shares.

When shares are issued by a parent company as consideration for the acquisition of a wholly owned subsidiary,the parent's EPS figures will always decline in the short term.This is because the subsidiary's earnings will only be added to the parent's earnings in the following period.

Anti-dilutive convertible securities would generally be used in the calculation of:

Transactions that take place in the period between the end of the fiscal year and the financials statement released must be disclosed and described when which of the following happens:

PPO Inc.discloses the following results and information at the end of the current year: What are PPO's earnings per common share for the current year? (Rounded to the nearest cent.)

A firm has correctly computed the following values: (Its shares are trading on the Vancouver Stock Exchange) Which of the following correctly states the EPS amounts to be reported?

Nonconvertible,cumulative,preferred shares affect the computation of EPS (for a simple capital structure),basic EPS,but not diluted EPS.

When different classes of common shares exist,a separate calculation of EPS is required for each class of common shares when dividend privileges differ by share class.

Where there are significant changes in a corporation's capital structure after year end but before the financial statement date,the transaction must be disclosed and described.

A simple capital structure could have,in addition to common shares,a security that is a:

DCE had 900 common shares outstanding on January 1,2014,issued 600 shares on May 1 and had income applicable to common shares of $5,200 for the year ending December 31,2014.Earnings per common share for 2014 would be: (Rounded to the nearest cent)

On January 1,2012,KAR had 60,000 common shares issued and outstanding.On July 1,KAR sold 1,000 shares.KAR The net income for the year was $80,000.Calculate the basic earnings per share.

Choose the correct statement concerning EPS.

The classification of a security as a convertible security should be based on information available at the time:

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters