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Question
Cash dividends paid by a corporation
A. are an expense of the corporation that declared the dividend.
B. reduces the net income of the corporation that declared the dividend.
C. reduces the retained earnings of the corporation that declared the dividend.
D. reduces the retained earnings of the corporation that declared the dividend because net income is reduced by the amount of the dividend.
Answer
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Related questions
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Briefly explain the forces behind the rise of IFRS.
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IFRS frequently
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B. permit only one accounting treatment for similar business transactions and events to promote comparability.
C. allow firms less latitude when compared to U.S. GAAP.
D. follow a more generalized overview approach than do U.S. GAAP counterpart standards.
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B. consistency.
C. conservatism.
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B. comparable.
C. neutral.
D. faithfully represented.
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Q:
The Black Corporation has provided the following information:
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Increase in prepaid expenses: $14,000
Amortization of discount on bonds payable: $10,000
Decrease in accounts payable: $20,000
Increase in inventory: $21,000
Dividends declared: $39,000
Dividends paid: $36,000
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Q:
Which of the following correctly describes U.S. GAAP accounting for convertible bonds and the implication of that requirement?
A. separation of debt and equity components; interest expense is overstated.
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B. Total owners' equity increases $790,000 if the market value method of recording the conversion is used.
C. Total owners' equity increases $790,000 if the book value method of recording the conversion is used.
D. Total owners' equity increases $900,000 if the market value method of recording the conversion is used.
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Over the vesting period for employee stock options, current GAAP requires that the entire compensation expense be recognized
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B. in the last year of the vesting period.
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The numerator used in the calculation of basic earnings per share was $797,000.
Cash dividends were paid to the common shareholders.
8% convertible bonds with a par value of $1,000,000 were issued on July 1, 2011.
The corporation's marginal income tax rate is 40%.
6% convertible preferred stock with a par value of $800,000 were outstanding during the entire year.
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550,000 shares of common stock were outstanding on January 1, 2011.
Bonds convertible into 50,000 shares of common stock were issued on July 1, 2011; the bonds have been determined to be dilutive.
36,000 shares of common stock were issued on November 1, 2011.
24,000 shares of common stock were purchased on December 1, 2011.
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A company that has earnings in Year 2 equal to the earnings of Year 1 can improve its Year 2 reported earnings per share by
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Which of the following statements is correct when a company has a complex capital structure?
A. Diluted earnings per share must be shown on the income statement.
B. Diluted earnings per share and basic earnings per share must both be shown on the income statement.
C. The company might have convertible bonds outstanding.
D. The company must have participating preferred stock outstanding.
Q:
Which of the following is not indicative of a complex capital structure?
A. Outstanding convertible bonds.
B. Outstanding convertible preferred stock.
C. Outstanding cumulative preferred stock.
D. Outstanding stock options.
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Assuming that the preferred stock is cumulative, and that there are no dividends in arrears, what is the maximum dividend that may be distributed to common shareholders at December 31, 2012?
A. $9,500,000
B. $7,000,000
C. $7,500,000
D. $2,000,000
Q:
What is the owners' equity balance on December 31, 2012?
A. $8,663,350
B. $8,738,350
C. $8,865,850
D. $8,934,300
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What is the retained earnings balance on December 31, 2012?
A. $1,994,050
B. $2,219,050
C. $2,214,300
D. $2,246,550
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Which of the following does not accurately describe the proprietary view of the firm?
A. Its focus is on the firm's net assets.
B. It is the prevailing view of GAAP.
C. Its focus is on owners' equity.
D. Whether creditors or shareholders provided the firm's assets is irrelevant.
Q:
By using the book value method to record the conversion of convertible bonds, managers are able to protect themselves from recording conversion losses.
Q:
SFAS No. 123 required companies to use the fair value approach when determining compensation expense pertaining to stock options.