Question 1

When a stock split or stock dividend occurs during the year,it is retroactive to the beginning of the year.

Accepted Answer

A) True 
 B)False

Question 2

Hudson Motors reported $535,000 net income for the current year.Beginning common shares outstanding were 120,000.Hudson also had 10,000,6% nonconvertible,cumulative,$100 par value preferred shares outstanding for the entire year.No cash dividends were declared.Compute basic earnings per share.

Accepted Answer

A) $4.46 
B) $4.11 
C) $3.96 
D) $3.65 
A) $4.46 
B) $4.11 
C) $3.96 
D) $3.65

Question 3

Colselo has 200,000 common share outstanding for the year and net income of $400,000.It has 20,000 stock options and 20,000 shares of $100,6% cumulative preferred stock,both of which were outstanding for the entire year.Compute basic and diluted EPS.

Accepted Answer

A) basic EPS $2.00; diluted EPS $1.67 
B) basic EPS $2.00; diluted EPS $1.27 
C) basic EPS $1.40; diluted EPS $1.27 
D) basic EPS $1.40; diluted EPS $1.67 
A) basic EPS $2.00; diluted EPS $1.67 
B) basic EPS $2.00; diluted EPS $1.27 
C) basic EPS $1.40; diluted EPS $1.27 
D) basic EPS $1.40; diluted EPS $1.67

Question 4

Stock options and stock warrants affect only the denominator of the diluted EPS calculation.

Accepted Answer

A) True 
 B)False

Question 5

What is the protocol to determine if multiple potentially dilutive securities are actually dilutive or antidilutive?

Accepted Answer

When multiple potentially dilutive secur

Question 6

McManus Inc.reported net earnings of $400,000 for the year.McManus has 200,000 shares of common stock outstanding all year.On March 31,the company granted 40,000 stock options that allow employees to purchase shares for $15 each.The company stock has averaged $20 in the market during the year.Compute the basic and diluted EPS.

Accepted Answer

A) basic EPS $2.00; diluted EPS $1.67 
B) basic EPS $2.00; diluted EPS $1.91 
C) basic EPS $2.00; diluted EPS $1.93 
D) basic EPS $1.93; diluted EPS $1.93 
A) basic EPS $2.00; diluted EPS $1.67 
B) basic EPS $2.00; diluted EPS $1.91 
C) basic EPS $2.00; diluted EPS $1.93 
D) basic EPS $1.93; diluted EPS $1.93

Question 7

If a company provides basic and diluted EPS on the income statement for each year presented,it has no further information requirements.

Accepted Answer

A) True 
 B)False

Question 8

The EPS denominator for basic EPS is based on the weighted-average of common shares outstanding during the year.

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following is required in the notes to the financial statement for EPS?

Accepted Answer

A) detailed calculations of weighted average shares outstanding for the period 
B) a discussion of antidilutive securities that were excluded from the computation of diluted EPS 
C) all stockholder transactions that occurred after the close of the year 
D) all adjustments to the denominator for preferred dividends 
A) detailed calculations of weighted average shares outstanding for the period 
B) a discussion of antidilutive securities that were excluded from the computation of diluted EPS 
C) all stockholder transactions that occurred after the close of the year 
D) all adjustments to the denominator for preferred dividends

Question 10

Walker Corporation has three potentially dilutive securities.Net income for the year is $500,000 and the weighted average common shares outstanding is 200,000 shares.Computation of the antidilution sequencing recorded the following:
   Required: Write the basic equation for EPS and compute basic EPS.Determine the order of entry into the EPS computation.Compute final diluted EPS and show all computations to determine your final answer.

Accepted Answer

Basic EPS =
 @#IMG-DLM& 
 Basic EPS = = $2.35
 @#IMG-DLM&

Question 11

Terrell Foods reported $950,000 in net income and its weighted average shares outstanding for the year is 200,000 shares.In prior years it sold $2,000,000 of 8% long-term bonds at par which are still outstanding.The bonds are convertible into 50,000 shares of common stock.The tax rate for all years is 40%.If Terrell has no other potentially dilutive securities and no preferred stock,what are basic and diluted EPS?

Accepted Answer

A) basic EPS $4.75; diluted EPS $4.18 
B) basic EPS $5.34; diluted EPS $4.18 
C) basic EPS $4.75; diluted EPS $3.80 
D) basic EPS $5.34; diluted EPS $3.80 
A) basic EPS $4.75; diluted EPS $4.18 
B) basic EPS $5.34; diluted EPS $4.18 
C) basic EPS $4.75; diluted EPS $3.80 
D) basic EPS $5.34; diluted EPS $3.80

Question 12

The denominator of the basic EPS equation contains the ________.

Accepted Answer

A) weighted-average shares of common stock outstanding for the year 
B) number of shares of common shares outstanding stock at the end of the year 
C) largest number of common shares outstanding during the year 
D) total of common and preferred shares outstanding during the year 
A) weighted-average shares of common stock outstanding for the year 
B) number of shares of common shares outstanding stock at the end of the year 
C) largest number of common shares outstanding during the year 
D) total of common and preferred shares outstanding during the year

Question 13

Basic EPS measures the earnings available to common shareholders based on existing outstanding shares during the period.

Accepted Answer

A) True 
 B)False

Question 14

Smythe,Inc.has four potentially dilutive securities.Computation of the antidilution sequencing recorded the following:   What is the correct order of entry into the EPS computation?

Accepted Answer

A) convertible preferred stock,stock warrants,convertible bonds,stock options 
B) stock options,stock warrants,convertible bonds,convertible preferred stock 
C) convertible bonds,convertible preferred stock,stock warrants 
D) stock options,convertible bonds,convertible preferred stock,stock warrants 
A) convertible preferred stock,stock warrants,convertible bonds,stock options 
B) stock options,stock warrants,convertible bonds,convertible preferred stock 
C) convertible bonds,convertible preferred stock,stock warrants 
D) stock options,convertible bonds,convertible preferred stock,stock warrants

Question 15

Accounting standards require which one of the following groups of presentations on the income statement?

Accepted Answer

A) basic and diluted EPS for all periods presented for income from continuing operations,discontinued operations,and net income 
B) basic and diluted EPS for all periods presented for net income 
C) basic EPS for only three periods for income from continuing operations and net income 
D) basic and diluted EPS for the current period for income from continuing operations,discontinued operations,and net income 
A) basic and diluted EPS for all periods presented for income from continuing operations,discontinued operations,and net income 
B) basic and diluted EPS for all periods presented for net income 
C) basic EPS for only three periods for income from continuing operations and net income 
D) basic and diluted EPS for the current period for income from continuing operations,discontinued operations,and net income

Question 16

George Manufacturing had net income of $200,000 and declared preferred dividends of $25,000 during the current year.George began the year with 20,000 common shares outstanding.It issued 30,000 shares on June 30 and repurchased 6,000 of the newly issued shares on November 1.Compute George's weighted-average common shares outstanding for the year.

Accepted Answer

A) 22,000 
B) 34,000 
C) 44,000 
D) 50,000 
A) 22,000 
B) 34,000 
C) 44,000 
D) 50,000

Question 17

Interurban Company began operations on the first day of the year.On that day they issued 10,000 shares.On March 1 they issued 20,000 shares and on July 1,another 30,000 shares.On December 1,Interurban repurchased 5,000 shares of outstanding shares.Compute basic EPS for the first year of operation if net income was $60,000.

Accepted Answer

A) $1.64 
B) $1.45 
C) $1.20 
D) $1.00 
A) $1.64 
B) $1.45 
C) $1.20 
D) $1.00

Question 18

Hora Corporation has three potentially dilutive securities.Net income for the year is $500,000 and the weighted average common shares outstanding is 200,000 shares.Computation of the antidilution sequencing recorded the following:
   Required: Write the basic equation for EPS and compute basic EPS.Determine the order of entry into the diluted EPS computation.Compute diluted EPS and show all computations to determine your final answer.Prepare all required disclosures for the income statement.

Accepted Answer

Basic EPS =
 @#IMG-DLM& 
 Basic EPS = = $1.45
 @#IMG-DLM&

Question 19

Any events that would have a material impact on the denominator of the EPS calculation that occur after the close of the period would require disclosure in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

When a stock split or stock dividend occurs during the year,it is retroactive to the beginning of the year.

Hudson Motors reported $535,000 net income for the current year.Beginning common shares outstanding were 120,000.Hudson also had 10,000,6% nonconvertible,cumulative,$100 par value preferred shares outstanding for the entire year.No cash dividends were declared.Compute basic earnings per share.

Colselo has 200,000 common share outstanding for the year and net income of $400,000.It has 20,000 stock options and 20,000 shares of $100,6% cumulative preferred stock,both of which were outstanding for the entire year.Compute basic and diluted EPS.

Stock options and stock warrants affect only the denominator of the diluted EPS calculation.

What is the protocol to determine if multiple potentially dilutive securities are actually dilutive or antidilutive?

If a company provides basic and diluted EPS on the income statement for each year presented,it has no further information requirements.

The EPS denominator for basic EPS is based on the weighted-average of common shares outstanding during the year.

Which one of the following is required in the notes to the financial statement for EPS?

The denominator of the basic EPS equation contains the ________.

Basic EPS measures the earnings available to common shareholders based on existing outstanding shares during the period.

Smythe,Inc.has four potentially dilutive securities.Computation of the antidilution sequencing recorded the following: What is the correct order of entry into the EPS computation?

Accounting standards require which one of the following groups of presentations on the income statement?

Any events that would have a material impact on the denominator of the EPS calculation that occur after the close of the period would require disclosure in the notes to the financial statements.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Accounting Corrections and Error Analysis

Filters

Exam 21: Earnings Per Share

When a stock split or stock dividend occurs during the year,it is retroactive to the beginning of the year.

Hudson Motors reported $535,000 net income for the current year.Beginning common shares outstanding were 120,000.Hudson also had 10,000,6% nonconvertible,cumulative,$100 par value preferred shares outstanding for the entire year.No cash dividends were declared.Compute basic earnings per share.

Colselo has 200,000 common share outstanding for the year and net income of $400,000.It has 20,000 stock options and 20,000 shares of $100,6% cumulative preferred stock,both of which were outstanding for the entire year.Compute basic and diluted EPS.

Stock options and stock warrants affect only the denominator of the diluted EPS calculation.

What is the protocol to determine if multiple potentially dilutive securities are actually dilutive or antidilutive?

If a company provides basic and diluted EPS on the income statement for each year presented,it has no further information requirements.

The EPS denominator for basic EPS is based on the weighted-average of common shares outstanding during the year.

Which one of the following is required in the notes to the financial statement for EPS?

The denominator of the basic EPS equation contains the ________.

Basic EPS measures the earnings available to common shareholders based on existing outstanding shares during the period.

Smythe,Inc.has four potentially dilutive securities.Computation of the antidilution sequencing recorded the following: What is the correct order of entry into the EPS computation?

Accounting standards require which one of the following groups of presentations on the income statement?

Any events that would have a material impact on the denominator of the EPS calculation that occur after the close of the period would require disclosure in the notes to the financial statements.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Accounting Corrections and Error Analysis

Filters