Question 1

The date on a statement of stockholders' equity is for a period of time rather than for a specific point in time.

Accepted Answer

A) True 
 B)False

Question 2

Bowen Corporation had 45,000 shares of common stock outstanding from January 1 to April 1 and 65,000 shares from April 1 to December 31. What is the weighted-average number of shares used for earnings per share calculations?

Accepted Answer

A)  50,000 
B)  55,000 
C)  60,000 
D)  61,333 
A)  50,000 
B)  55,000 
C)  60,000 
D)  61,333

Question 3

Gains and losses from the sale of plant assets should be classified as extraordinary on the income statement.

Accepted Answer

A) True 
 B)False

Question 4

On July 1, 2010, Tobias Corporation had 20,000 shares of its $100 par value common stock outstanding. On July 2, 2010, Tobias declared a 15 percent stock dividend to be distributed on August 6, 2010, to shareholders of record on July 16, 2010. What amount of retained earnings should be transferred to contributed capital because of this dividend?

Accepted Answer

A)  None 
B)  Market value of the stock at the date of distribution multiplied by the number of dividend shares 
C)  Market value of the stock at the date of declaration multiplied by the number of dividend shares 
D)  Par value per share multiplied by the number of dividend shares 
A)  None 
B)  Market value of the stock at the date of distribution multiplied by the number of dividend shares 
C)  Market value of the stock at the date of declaration multiplied by the number of dividend shares 
D)  Par value per share multiplied by the number of dividend shares

Question 5

Ricardo Corporation reported earnings per share of $2.50 for the year ended December 31, 2010. The following facts pertain to Ricardo Corporation:
80,000 shares of common stock were issued and outstanding on December 31, 2009.
40,000 shares of common stock were issued for cash on July 1, 2010.
Net income for 2010 was $325,000.
There were 8,000 shares of nonconvertible preferred stock outstanding during 2010.
Dividends of $20,000 were declared and paid to common stockholders during 2010.
Calculate the amount of dividends declared during 2010 on the nonconvertible preferred stock.

Accepted Answer

$75,000 [(80,000 @#LAT-DLM& 1/

Question 6

How is it possible for a company to show a net income for a given year yet be in a deficit position at year end?

Accepted Answer

Net income means that revenues exceeded

Question 7

A loss due to discontinued operations should be reported on the income statement

Accepted Answer

A)  before extraordinary items. 
B)  before income taxes expense. 
C)  after net income. 
D)  after extraordinary items. 
A)  before extraordinary items. 
B)  before income taxes expense. 
C)  after net income. 
D)  after extraordinary items.

Question 8

Define the term quality of earnings, and discuss its significance in performing financial statement analysis.

Accepted Answer

Quality of earnings refers to how net in

Question 9

A stock dividend is a pro rata distribution of cash to a corporation's stockholders.

Accepted Answer

A) True 
 B)False

Question 10

Elias Corporation has 40,000 shares of $10 par value common stock outstanding. Prepare entries in journal form without explanations for the following transactions. (Market value of the stock was $15.00 on December 16 and $15.50 on December 23.)

Accepted Answer

The answer of Elias Corporation has 40,000 shares of $10...

Question 11

A large uninsured loss from a fire is treated on the income statement as an extraordinary item.

Accepted Answer

A) True 
 B)False

Question 12

A stock split results in a transfer of the market value of the stock from Retained Earnings to Contributed Capital.

Accepted Answer

A) True 
 B)False

Question 13

Income tax allocation is necessary because tax rates differ at different levels of income.

Accepted Answer

A) True 
 B)False

Question 14

Non-operating items will generally reduce a company's quality of earnings.

Accepted Answer

A) True 
 B)False

Question 15

Shank Corporation uses a different depreciation method for its income tax return than it does for its income statement. Consequently, the corporation has a credit balance in its Deferred Income Taxes account. This balance should be classified as a

Accepted Answer

A)  current asset. 
B)  long-term liability. 
C)  current liability. 
D)  long-term asset. 
A)  current asset. 
B)  long-term liability. 
C)  current liability. 
D)  long-term asset.

Question 16

The write-off of goodwill that has been impaired is a component of income from operations.

Accepted Answer

A) True 
 B)False

Question 17

Earnings per share information need not be shown for extraordinary gains and losses.

Accepted Answer

A) True 
 B)False

Question 18

The preparation of a statement of stockholders' equity makes which other financial statement unnecessary?

Accepted Answer

A)  Income statement 
B)  Statement of cash flows 
C)  Statement of retained earnings 
D)  Balance sheet 
A)  Income statement 
B)  Statement of cash flows 
C)  Statement of retained earnings 
D)  Balance sheet

Question 19

Which of the following would not affect the balance of the Retained Earnings account?

Accepted Answer

A)  Stock split 
B)  Net loss 
C)  Cash dividend declared 
D)  Stock dividend declared 
A)  Stock split 
B)  Net loss 
C)  Cash dividend declared 
D)  Stock dividend declared

Question 20

What issues must be considered when determining whether or not an uninsured loss from tornado destruction should be treated as an extraordinary item?

Accepted Answer

For the loss to be treated as

Exam 14: The Corporate Income Statement and the Statement of Stockholders Equity

The date on a statement of stockholders' equity is for a period of time rather than for a specific point in time.

Bowen Corporation had 45,000 shares of common stock outstanding from January 1 to April 1 and 65,000 shares from April 1 to December 31. What is the weighted-average number of shares used for earnings per share calculations?

Gains and losses from the sale of plant assets should be classified as extraordinary on the income statement.

How is it possible for a company to show a net income for a given year yet be in a deficit position at year end?

A loss due to discontinued operations should be reported on the income statement

Define the term quality of earnings, and discuss its significance in performing financial statement analysis.

A stock dividend is a pro rata distribution of cash to a corporation's stockholders.

Elias Corporation has 40,000 shares of $10 par value common stock outstanding. Prepare entries in journal form without explanations for the following transactions. (Market value of the stock was $15.00 on December 16 and $15.50 on December 23.)

A large uninsured loss from a fire is treated on the income statement as an extraordinary item.

A stock split results in a transfer of the market value of the stock from Retained Earnings to Contributed Capital.

Income tax allocation is necessary because tax rates differ at different levels of income.

Non-operating items will generally reduce a company's quality of earnings.

Shank Corporation uses a different depreciation method for its income tax return than it does for its income statement. Consequently, the corporation has a credit balance in its Deferred Income Taxes account. This balance should be classified as a

The write-off of goodwill that has been impaired is a component of income from operations.

Earnings per share information need not be shown for extraordinary gains and losses.

The preparation of a statement of stockholders' equity makes which other financial statement unnecessary?

Which of the following would not affect the balance of the Retained Earnings account?

What issues must be considered when determining whether or not an uninsured loss from tornado destruction should be treated as an extraordinary item?

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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