Question 1

Large stock dividends tend to keep stock prices down.

Accepted Answer

A) True 
 B)False

Question 2

Stock splits are always in a 2 for 1 ratio.

Accepted Answer

A) True 
 B)False

Question 3

According to the Sarbanes-Oxley Act,lying to an external auditor can create a criminal penalty as well as a civil penalty.

Accepted Answer

A) True 
 B)False

Question 4

A prior period adjustment appears in the financial statements of the current year when:

Accepted Answer

A) An error was made in computing the net income of the current period. 
B) An error was made in measuring the net income of a previous year or years. 
C) An extraordinary loss in a prior year was included among normal results of operations in the prior year. 
D) Earnings per share figures from prior years are restated to reflect the increased number of shares outstanding due to a stock split or a stock dividend. 
A) An error was made in computing the net income of the current period. 
B) An error was made in measuring the net income of a previous year or years. 
C) An extraordinary loss in a prior year was included among normal results of operations in the prior year. 
D) Earnings per share figures from prior years are restated to reflect the increased number of shares outstanding due to a stock split or a stock dividend.

Question 5

Comprehensive income is a component of net income.

Accepted Answer

A) True 
 B)False

Question 6

On January 1,2015,Edward Corporation had 10,000 shares of $6 par value common stock and 10,000 shares of 8%,$100 par value convertible p

Accepted Answer

A) 17,500. 
B) 40,000. 
C) 7,500. 
D) 10,000. 
A) 17,500. 
B) 40,000. 
C) 7,500. 
D) 10,000.

Question 7

On January 31,Village Bank had 500,000 shares of $3 par value common stock outstanding.On that date,the company declared a 10% stock dividend when the market price of the stock was $62 per share.The immediate effect of this dividend upon Village Bank was:

Accepted Answer

A) A reduction in cash of $3,794,500. 
B) A reduction in retained earnings of $3,100,000. 
C) A reduction in retained earnings of $150,000. 
D) A liability to the stockholders of $150,000. 
A) A reduction in cash of $3,794,500. 
B) A reduction in retained earnings of $3,100,000. 
C) A reduction in retained earnings of $150,000. 
D) A liability to the stockholders of $150,000.

Question 8

Stock dividend-effect on book value
Olympic Corporation has 75,000 shares of $1 par value stock outstanding.The largest single stockholder is Lou Cheng,who owns 6,000 shares.On December 31,the total assets of the company amount to $4,360,000 and total liabilities to $2,230,000.On that date,the board of directors declared a stock dividend of one new share for each five shares outstanding.Compute the following:

Accepted Answer

(a)$28.40

Question 9

Comprehensive income may be presented in a statement with net income,in a separate statement,or as part of the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 10

Extraordinary items and the results of discontinued operations are shown in the income statement net of any related income tax effects.

Accepted Answer

A) True 
 B)False

Question 11

"Discontinued operations" is an example of an extraordinary item.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statistics is generally computed for both common and p

Accepted Answer

A) Earnings per share. 
B) Price-earnings ratio (p/e ratio). 
C) Annual dividend per share. 
D) Retained earnings per share. 
A) Earnings per share. 
B) Price-earnings ratio (p/e ratio). 
C) Annual dividend per share. 
D) Retained earnings per share.

Question 13

Baron Corporation was authorized by its charter to issue 80,000 shares of 12%,$100 par cumulative p

Accepted Answer

The answer of Baron Corporation was authorized by its charter...

Question 14

The amount of earnings per share is usually computed:

Accepted Answer

A) For both preferred and common stock. 
B) For common stock by deducting the dividends on preferred stock from net income and dividing the remaining amount by the weighted average number of common shares outstanding. 
C) By dividing net income by the combined number of preferred and common shares. 
D) On the basis of the number of shares outstanding at year-end,regardless of changes in the number of shares during the year. 
A) For both preferred and common stock. 
B) For common stock by deducting the dividends on preferred stock from net income and dividing the remaining amount by the weighted average number of common shares outstanding. 
C) By dividing net income by the combined number of preferred and common shares. 
D) On the basis of the number of shares outstanding at year-end,regardless of changes in the number of shares during the year.

Question 15

The price-earnings ratio is the:

Accepted Answer

A) Book value of a share of common stock divided by EPS. 
B) Market price of a share of common stock divided by EPS. 
C) Par value of a share of common stock divided by EPS. 
D) Market price divided by book value of a share of stock. 
A) Book value of a share of common stock divided by EPS. 
B) Market price of a share of common stock divided by EPS. 
C) Par value of a share of common stock divided by EPS. 
D) Market price divided by book value of a share of stock.

Question 16

Stock dividends and stock split-journal entries
Eagle Corporation has 250,000 shares of $6 par value capital stock outstanding.Prepare journal entries in the space provided to record the following transactions during the current year:

Accepted Answer

The answer of Stock dividends and stock split-journal entries
Eagle Corporation...

Question 17

The amount transferred out of retained earnings when a 4% stock dividend is declared is equal to the prevailing market value per share times the number of dividend shares to be distributed.

Accepted Answer

A) True 
 B)False

Question 18

After preparing the financial statements for 2015,the accountant for the Dawson Corporation discovered that a prior period adjustment had been omitted from the 2013 financial statements.Which of the following is most likely to require correction as a result of this oversight?

Accepted Answer

A) Earnings per share as originally computed. 
B) Net income for 2015 as originally reported. 
C) Ending retained earnings at December 31,2015. 
D) Extraordinary items as originally reported. 
A) Earnings per share as originally computed. 
B) Net income for 2015 as originally reported. 
C) Ending retained earnings at December 31,2015. 
D) Extraordinary items as originally reported.

Question 19

On January 1,2015,Ole Corporation had 75,000 shares of $8 par value common stock outstanding.On July 31,2015,Ole issued an additional 10,000 shares in exchange for a building.What number of shares will be used in the computation of earnings per share for the year 2015?

Accepted Answer

A) 75,000. 
B) 80,000. 
C) 79,167. 
D) 85,000. 
A) 75,000. 
B) 80,000. 
C) 79,167. 
D) 85,000.

Question 20

It would be reasonable to assume that:

Accepted Answer

A) Basic earnings per share should exceed diluted earnings per share. 
B) Diluted earnings per share should exceed basic earnings per share. 
C) Basic earnings per share should be equal to diluted earnings per share. 
D) Basic earnings per share would not be presented with diluted earnings per share. 
A) Basic earnings per share should exceed diluted earnings per share. 
B) Diluted earnings per share should exceed basic earnings per share. 
C) Basic earnings per share should be equal to diluted earnings per share. 
D) Basic earnings per share would not be presented with diluted earnings per share.

Exam 12: Income and Changes in Retained Earnings

Large stock dividends tend to keep stock prices down.

Stock splits are always in a 2 for 1 ratio.

According to the Sarbanes-Oxley Act,lying to an external auditor can create a criminal penalty as well as a civil penalty.

A prior period adjustment appears in the financial statements of the current year when:

Comprehensive income is a component of net income.

On January 1,2015,Edward Corporation had 10,000 shares of $6 par value common stock and 10,000 shares of 8%,$100 par value convertible p

On January 31,Village Bank had 500,000 shares of $3 par value common stock outstanding.On that date,the company declared a 10% stock dividend when the market price of the stock was $62 per share.The immediate effect of this dividend upon Village Bank was:

Comprehensive income may be presented in a statement with net income,in a separate statement,or as part of the notes to the financial statements.

Extraordinary items and the results of discontinued operations are shown in the income statement net of any related income tax effects.

"Discontinued operations" is an example of an extraordinary item.

Which of the following statistics is generally computed for both common and p

Baron Corporation was authorized by its charter to issue 80,000 shares of 12%,$100 par cumulative p

The amount of earnings per share is usually computed:

The price-earnings ratio is the:

Stock dividends and stock split-journal entries Eagle Corporation has 250,000 shares of $6 par value capital stock outstanding.Prepare journal entries in the space provided to record the following transactions during the current year:

The amount transferred out of retained earnings when a 4% stock dividend is declared is equal to the prevailing market value per share times the number of dividend shares to be distributed.

After preparing the financial statements for 2015,the accountant for the Dawson Corporation discovered that a prior period adjustment had been omitted from the 2013 financial statements.Which of the following is most likely to require correction as a result of this oversight?

On January 1,2015,Ole Corporation had 75,000 shares of $8 par value common stock outstanding.On July 31,2015,Ole issued an additional 10,000 shares in exchange for a building.What number of shares will be used in the computation of earnings per share for the year 2015?

It would be reasonable to assume that:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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