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Question
The Shasta Corporation began operations in 2011. Shasta's investment portfolio reported the following on December 31, 2011:
Which of the following is correct with respect to the accounting for Shasta's investment portfolio?
A. Net income was decreased $55,000 during 2011.
B. Total stockholders' equity was decreased $55,000 as of December 31, 2011.
C. Net income was increased $15,000 during 2011.
D. Total stockholders' equity was decreased $15,000 as of December 31, 2011.
Answer
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Related questions
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D. follow a more generalized overview approach than do U.S. GAAP counterpart standards.
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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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Cash dividends were paid to the common shareholders.
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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.
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24,000 shares of common stock were purchased on December 1, 2011.
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C. The company might have convertible bonds outstanding.
D. The company must have participating preferred stock outstanding.
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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?
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C. $7,500,000
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What is the owners' equity balance on December 31, 2012?
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B. $8,738,350
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What is the retained earnings balance on December 31, 2012?
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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.
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SFAS No. 123 required companies to use the fair value approach when determining compensation expense pertaining to stock options.