Question 1

Supervox Corporation declared a 3-for-2 common stock split,but this transaction was erroneously recorded as a 50% common stock dividend.As a result:

Accepted Answer

A) Retained earnings is understated. 
B) The total dollar amount of stockholders' equity is overstated. 
C) The corporate records do not show the correct number of shares of common stock outstanding. 
D) The common stock account is understated. 
A) Retained earnings is understated. 
B) The total dollar amount of stockholders' equity is overstated. 
C) The corporate records do not show the correct number of shares of common stock outstanding. 
D) The common stock account is understated.

Question 2

The date on a statement of retained earnings is at a point in time; such as,at December 31,2015.

Accepted Answer

A) True 
 B)False

Question 3

Large stock dividends tend to:

Accepted Answer

A) Increase stock prices. 
B) Have no effect upon stock prices. 
C) Keep stock prices down. 
D) Decrease total assets. 
A) Increase stock prices. 
B) Have no effect upon stock prices. 
C) Keep stock prices down. 
D) Decrease total assets.

Question 4

For the current year,Voque Company reported basic earnings per share of $8 and diluted earnings per share of $3.The difference between these figures is attributable to outstanding shares of convertible p

Accepted Answer

A) $8. 
B) $5. 
C) $3. 
D) Cannot be determined. 
A) $8. 
B) $5. 
C) $3. 
D) Cannot be determined.

Question 5

Earnings per share is equal to net income applicable to common stock,divided by the weighted number of common shares outstanding.

Accepted Answer

A) True 
 B)False

Question 6

Stock dividends
What is the effect of a stock dividend?

Accepted Answer

Stock dividends do not change total asse

Question 7

A small stock dividend is recorded at:

Accepted Answer

A) Market value. 
B) Book value. 
C) Par value. 
D) No amount,just a memorandum entry is required. 
A) Market value. 
B) Book value. 
C) Par value. 
D) No amount,just a memorandum entry is required.

Question 8

Which of the following items would not reduce retained earnings?

Accepted Answer

A) A common stock dividend. 
B) A preferred stock dividend. 
C) A cash dividend. 
D) Cash payment of a previously declared dividend. 
A) A common stock dividend. 
B) A preferred stock dividend. 
C) A cash dividend. 
D) Cash payment of a previously declared dividend.

Question 9

Which of the following would not be used in computing diluted earnings per share?

Accepted Answer

A) Preferred stock. 
B) Convertible bonds. 
C) Stock options. 
D) Weighted-average number of shares of common stock outstanding during the year. 
A) Preferred stock. 
B) Convertible bonds. 
C) Stock options. 
D) Weighted-average number of shares of common stock outstanding during the year.

Question 10

Diluted earnings per share represents a hypothetical case,showing what earnings per share would be if certain securities were converted into additional shares of common stock.

Accepted Answer

A) True 
 B)False

Question 11

Stockholders' equity
The stockholders' equity section of the balance sheet of Nautilus Corporation at December 31,2015,appears as follows:   Answer the following questions based on the stockholders' equity section given above.Each question is a separate situation,unless otherwise indicated.
(a)What is the total dollar amount paid annually as dividends to p

Accepted Answer

(a)$100 par × 8% × 14,000 shares = $112,

Question 12

Dividends are first recorded and retained earnings are reduced on:

Accepted Answer

A) The ex-dividend date. 
B) The date of record. 
C) The date of declaration. 
D) The date of payment. 
A) The ex-dividend date. 
B) The date of record. 
C) The date of declaration. 
D) The date of payment.

Question 13

A stock dividend provides a stockholder with more shares of stock,but his or her percentage of ownership in the company is no larger than before.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following items would be included in the discontinued operations section of the income statement?

Accepted Answer

A) Income or loss from operating the segment prior to its disposal. 
B) The gain or loss on disposal of the segment. 
C) Both the income or loss from operating the segment prior to its disposal,and the gain or loss on disposal of the segment. 
D) Only losses and not gains on the disposal of a segment. 
A) Income or loss from operating the segment prior to its disposal. 
B) The gain or loss on disposal of the segment. 
C) Both the income or loss from operating the segment prior to its disposal,and the gain or loss on disposal of the segment. 
D) Only losses and not gains on the disposal of a segment.

Question 15

The purpose of developing the subtotals "Income before Extraordinary Items" and "Income from Continuing Operations" in an income statement is to:

Accepted Answer

A) Assist investors in forecasting future operating results. 
B) Increase the amount of reported net income. 
C) Decrease the amount of income subject to income taxes. 
D) Provide investors with the information necessary to compute earnings per share. 
A) Assist investors in forecasting future operating results. 
B) Increase the amount of reported net income. 
C) Decrease the amount of income subject to income taxes. 
D) Provide investors with the information necessary to compute earnings per share.

Question 16

When a stock dividend is declared,total stockholders' equity will:

Accepted Answer

A) Decrease. 
B) Increase. 
C) Not change. 
D) Increase or decrease,depending upon whether it's a small or large stock dividend. 
A) Decrease. 
B) Increase. 
C) Not change. 
D) Increase or decrease,depending upon whether it's a small or large stock dividend.

Question 17

Which of the following would have no effect on Retained Earnings?

Accepted Answer

A) Declaration of a cash dividend. 
B) Declaration of a stock dividend. 
C) Declaration of a stock split. 
D) A prior period adjustment. 
A) Declaration of a cash dividend. 
B) Declaration of a stock dividend. 
C) Declaration of a stock split. 
D) A prior period adjustment.

Question 18

The numerator in calculating earnings per share is reduced for:

Accepted Answer

A) Noncumulative preferred dividends declared. 
B) Common dividends. 
C) Common stock dividends. 
D) Any form of dividend. 
A) Noncumulative preferred dividends declared. 
B) Common dividends. 
C) Common stock dividends. 
D) Any form of dividend.

Question 19

To receive the next cash dividend,an investor must purchase the stock before the:

Accepted Answer

A) Dividend declaration date. 
B) Ex-dividend date. 
C) Date of record. 
D) Payment date announced by the board of directors. 
A) Dividend declaration date. 
B) Ex-dividend date. 
C) Date of record. 
D) Payment date announced by the board of directors.

Question 20

In determining earnings per share when a p

Accepted Answer

A) True 
 B)False

Exam 12: Income and Changes in Retained Earnings

Supervox Corporation declared a 3-for-2 common stock split,but this transaction was erroneously recorded as a 50% common stock dividend.As a result:

The date on a statement of retained earnings is at a point in time; such as,at December 31,2015.

Large stock dividends tend to:

For the current year,Voque Company reported basic earnings per share of $8 and diluted earnings per share of $3.The difference between these figures is attributable to outstanding shares of convertible p

Earnings per share is equal to net income applicable to common stock,divided by the weighted number of common shares outstanding.

Stock dividends What is the effect of a stock dividend?

A small stock dividend is recorded at:

Which of the following items would not reduce retained earnings?

Which of the following would not be used in computing diluted earnings per share?

Diluted earnings per share represents a hypothetical case,showing what earnings per share would be if certain securities were converted into additional shares of common stock.

Dividends are first recorded and retained earnings are reduced on:

A stock dividend provides a stockholder with more shares of stock,but his or her percentage of ownership in the company is no larger than before.

Which of the following items would be included in the discontinued operations section of the income statement?

The purpose of developing the subtotals "Income before Extraordinary Items" and "Income from Continuing Operations" in an income statement is to:

When a stock dividend is declared,total stockholders' equity will:

Which of the following would have no effect on Retained Earnings?

The numerator in calculating earnings per share is reduced for:

To receive the next cash dividend,an investor must purchase the stock before the:

In determining earnings per share when a p

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