Q&A Hero

Q: Use the following information to calculate cash received from dividends: Dividends revenue $63,500 Dividends receivable, January 1 3,600 Dividends receivable, December 31 3,100 A.$63,500. B.$63,000. C.$64,000. D.$67,100. E.$60,400.

Q: Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Addam's statement of cash flows? A.In operating activities as a source of funds. B.In investing activities as a source of funds. C.In investing activities as a use of funds. D.In financing activities as a source of funds. E.In financing activities as a use of funds.

Q: A machine with a cost of $130,000, current year depreciation expense of $17,000 and accumulated depreciation of $85,000 is sold for $40,000 cash. The amount(s) that should be reported in the operating section of the statement of cash flows is: A.$17,000. B.$4,000. C.$57,000. D.$21,000. E.$22,000.

Q: A machine with a cost of $130,000, accumulated depreciation of $85,000, and current year depreciation expense of $17,000 is sold for $40,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is: A.$45,000. B.$5,000. C.$17,000. D.$28,000. E.$40,000.

Q: A company's income statement showed the following: net income, $124,000 and depreciation expense, $30,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; and accounts payable increased $3,400. Calculate the net cash provided or used by operating activities. A.$118,000. B.$159,200. C.$123,200. D.$148,800. E.$178,000.

Q: When preparing a statement of cash flows using the indirect method, which of the following is correct? A.Proceeds from the sale of equipment should be added to net income in the operating activities section. B.A loss on the sale of land should be added to net income in the operating activities section. C.The declaration of a cash dividend should be a use of cash in the financing activities section. D.The issuance of a stock dividend should be a use of cash in the financing activities section. E.The purchase of land and a building by issuing a long-term note payable should be a source of cash in the financing activities section.

Q: Use the following information to calculate cash paid for income taxes: Income tax expense $43,000 Income tax payable, January 1 9,100 Income tax payable, December 31 10,200 A.$23,700. B.$52,100. C.$53,200. D.$41,900. E.$43,000.

Q: Use the following information to calculate cash paid for wages and salaries: Salaries expense $168,000 Salaries payable, January 1 6,400 Salaries payable, December 31 10,600 A.$157,400. B.$163,800. C.$168,000. D.$172,200. E.$174,400.

Q: When preparing a statement of cash flows using the indirect method, each of the following should be classified as an operating cash flow except: A.An increase in accounts receivable. B.A decrease in accounts payable. C.Proceeds from the disposal of a long-term asset with no gain or loss. D.An increase in prepaid expenses. E.A decrease in accrued expenses payable.

Q: Preparation of the statement of cash flows does not involve: A.Computing the net increase or decrease in cash. B.Computing and reporting net cash provided or used by operations. C.Computing the profit compared to the net increase or decrease in cash. D.Computing and reporting net cash provided or used by financing activities. E.Computing and reporting net cash provided or used by investing activities.

Q: A company had net cash flows from operations of $341,000, net income of $286,000 and average total assets of $1,850,000. The cash flow on total assets ratio equals: A. 83.9% B. 542.5% C. 15.5% D. 18.4% E. 646.9%

Q: The statement of cash flows cannot help address questions such as A.How is the increase in investments financed? B.What is the source of cash for new plant assets? C.How much cash is generated from or used in operations? D. How much of the company's revenues have been retained as profit? E.Why is cash flow from operations different from income?

Q: The statement of cash flows helps analysts evaluate all but which of the following? A.Ability of the company to generate profit. B.Source of cash used for plant expansion. C.Differences between net income and net operating cash flow. D.Source of cash used to finance investing activities. E. Source of cash used for debt repayments..

Q: Common uses of the statement of cash flows include all but which of the following? A. Management prediction of future cash flows for decision making. B. Investor assessment of cash flows before buying and selling stock. C. Creditor evaluation of a company's ability to generate cash to cover debt. D. Government assessment of whether company is able to pay taxes as they become due. E. Management determination of the specific sources and uses of cash.

Q: Noncash investing and financing activities may be disclosed in: A.A note in the financial statements or a schedule attached to the statement of cash flows. B.The operating activities section of the statement of cash flows. C.The investing activities section of the statement of cash flows. D.The financing activities section of the statement of cash flows. E.The reconciliation of cash balance section.

Q: Typical cash flows from investing activities include each of the following except: A.Payments to purchase property, plant and equipment or other productive assets (excluding inventory). B.Proceeds from collecting the principal amount of accounts receivable arising from customer sales. C.Payments to buy intangible assets. D.Payments to acquire held-to maturity securities of other entities, except cash equivalents. E.Proceeds from the sale of equipment.

Q: Investing activities do not include the: A.Purchase of plant assets. B.Lending and collecting on notes receivable. C. Issuance of common stock D.Sale of plant assets. E.Sale of short-term investments other than cash equivalents.

Q: A cash equivalent is : A.An investment readily convertible to a known amount of cash. B.Close to its maturity date but its market value may still be affected by interest rate changes. C.Generally is within 12 months of its maturity date. D.Is not considered highly liquid. E.Another name for cash.

Q: The statement of cash flows reports all but which of the following: A.Cash flows from operating activities. B.Cash flows from financing activities. C.Cash flows from investing activities. D.Significant noncash financing and investing activities. E.The financial position of the company at the end of the accounting period.

Q: Cash flows are essentially the same as net income because they are both measured using accrual accounting principles.

Q: The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

Q: A cash coverage of growth ratio of less than 1 indicates cash inadequacy to meet asset growth.

Q: The cash flow on total assets ratio compared to the total assets ratio can be used as an indicator of earnings quality.

Q: Avro Corporation has $875,000 in stockholders' equity and 350,000 weighted-average shares of common stock outstanding. Calculate the book value per common share.

Q: Lafferty Corporation reported earnings per share of $9.75, paid a $6.00 cash dividend per share to preferred shareholders, and paid a $0.54 cash dividend per share to common shareholders. There were 10,000 shares of preferred stock outstanding and 600,000 shares of common stock outstanding during the year, and the market price per share of common stock was $41.60. Calculate the company's dividend yield for common stock.

Q: Gershwin Company reported net income of $428,000 and paid $8,500 in preferred cash dividends during the current year. The company had 110,000 common shares issued, and 10,000 common shares in treasury during the year. The year-end market price per common share was $41.05. Calculate the company's price-earnings ratio.

Q: A company reported $1,050,000 in net income for the current year. Earnings per common share is $1.75 and the year-end market price of the shares is $31.50. Calculate the company's price earnings ratio.

Q: Slate Corporation had the following balances in its stockholders' equity accounts at December 31, 2015: Common Stock, $10 par, 500,000 shares authorized, 20,000 shares issued "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. $200,000 Paid-in Capital in Excess of Par Value, Common "u00a6"u00a6"u00a6"u00a6 250,000 Retained Earnings "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 500,000 Treasury Stock, 1,000 shares "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 (20,000) Total stockholders' equity "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. $930,000 The following transactions occurred during 2016: February 3 Sold and issued 2,000 shares of common stock for $22 per share. May 10 Declared a $0.50 per share dividend on common stock. October 12 Sold 500 shares of the treasury stock for $20 per share. December 31 Net income for the year was determined to be $75,000. Based on the above information, prepare a statement of stockholders' equity for 2016. Use the form below. Slate Corporation Statement of Stockholders' Equity December 31, 2016 Common Stock Paid-in Capital in Excess of Par Value, Common Retained Earnings Treasury Stock Total Equity Balance, December 31, 2015 $200,000 $250,000 $500,000 $(20,000) $930,000

Q: Beagle Company earned $90,000 in income and paid cash dividends of $7,000 to preferred shareholders during the current year. Beagle had 15,500 weighted-average shares of common stock outstanding for the year. Calculate the company's earnings per share.

Q: Shaw Corporation reported stockholders' equity on December 31 of the prior year as follows: Common stock, $5 par value, 1,000,000 shares authorized, 500,000 shares issued"u00a6"u00a6. $2,500,000 Paid-in capital in excess of par, common stock... 1,000,000 Retained earnings"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. 3,000,000 The following selected transactions occurred during the current year: Feb. 15 The board of directors declared a 5% stock dividend to stockholders of record on March 1, payable March 20. The stock was selling for $8 per share. Mar. 9 Distributed the stock dividend. May 1 A cash dividend of $0.30 per share was declared by the board of directors to stockholders of record on May 20, payable June 1. June 1 Paid the cash dividend. Aug. 20 The board decided to split the stock 4-for-1, effective on September 1. Sept. 1 Stock split 4-for-1. Dec. 31 Earned a net income of $800,000 for the current year. Prepare a statement of retained earnings as of December 31 of the current year.

Q: Rhoads Corporation is authorized to issue 250,000 shares of $50 par, 10%, noncumulative, nonparticipating preferred stock and 5,000,000 shares of no-par common stock. Prepare journal entries to record the following selected transactions that occurred during this year: Feb. 1 Issued 10,000 shares of common stock for $30 cash per share. 15 Exchanged 2,000 shares of preferred stock for equipment and merchandise inventory with market values of $80,000 and $30,000, respectively.

Q: Boron Company is authorized to issue 50,000 shares of $50 par value, 8%, cumulative, fully participating preferred stock, and 750,000 shares of $5 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations: May 5 Exchanged 2,200 shares of preferred stock for a building with a market value of $135,000. July 20 Sold 1,550 shares of preferred stock for $50 cash per share. Dec. 20 Sold 1,000 shares of preferred stock at $52 cash per share.

Q: What is treasury stock? What reasons might a company hold treasury stock?

Q: Explain how to compute book value per common share and discuss how it can be used to analyze the financial condition of a corporation.

Q: A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share. The issue price was $10 per share. The entry to record this transaction would be: A.Debit Cash $50,000; credit Paid-in Capital in Excess of Par Value, Common Stock $45,000; credit Common Stock $5,000. B.Debit Cash $50,000; credit Common Stock $50,000. C.Debit Common Stock $50,000; credit Cash $50,000. D.Debit Treasury Stock $50,000; credit Cash $50,000. E.Debit Common Stock $25,000; debit Paid-in Capital in Excess of Par Value, Common Stock $5,000; credit Common Stock $45,000.

Q: A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share. The entry to record this transaction would be: A.Debit Cash $27,500; credit Paid-in Capital in Excess of Par Value, Common Stock $2,500; credit Common Stock $25,000. B.Debit Cash $27,500; credit Common Stock $27,500. C.Debit Common Stock $27,500; credit Cash $27,500. D.Debit Treasury Stock $27,500; credit Cash $27,500. E.Debit Treasury Stock $2,500; debit Paid-in Capital in Excess of Par Value, Treasury Stock $25,000; credit Common Stock $27,500.

Q: Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Year Dividend Declared 2015 $0 2016 $6,000 2017 $32,000 The amount of dividends paid to preferred and common shareholders in 2016 is: A.$3,500 preferred; $2,500 common. B.$3,000 preferred; $3,000 common. C.$0 preferred; $6,000 common. D.$4,200 preferred; $1,800 common. E.$6,000 preferred; $0 common.

Q: Fargo Company's outstanding stock consists of 400 shares of noncumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Year Dividend Declared 2015 $20,000 2016 $6,000 2017 $32,000 The amount of dividends paid to preferred and common shareholders in 2015 is: A.$200 preferred; $19,800 common. B.$4,000 preferred; $16,000 common. C.$17,000 preferred; $3,000 common. D.$10,000 preferred; $10,000 common. E.$20,000 preferred; $0 common.

Q: Fetzer Company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The journal entry to record the payment of the dividend is: A.Debit Retained Earnings $104,500; credit Common Dividends Payable $104,500. B.Debit Common Dividends Payable $104,500; credit Cash $104,500. C.Debit Retained Earnings $100,100; credit Common Dividends Payable $100,100. D.Debit Common Dividends Payable $100,100; credit Cash $100,100. E.Debit Retained Earnings $110,000; credit Common Dividends Payable $110,000.

Q: West Company declared a $0.50 per share cash dividend. The company has 190,000 shares issued, and 10,000 shares in treasury stock. The journal entry to record the payment of the dividend is: A.Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000. B.Debit Common Dividends Payable $95,000; credit Cash $95,000. C.Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000. D.Debit Common Dividends Payable $90,000; credit Cash $90,000. E.Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000.

Q: Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 100 shares of its common stock on May 1 for $5,000. On July 1, it reissued 50 of these shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2? A.$5,050. B.$2,600. C.$100. D.$50. E.$0.

Q: The following data has been collected about Keller Company's stockholders' equity accounts: Common stock $10 par value 20,000 shares authorized and 10,000 shares issued, 9,000 shares outstanding $100,000 Paid-in capital in excess of par value, common stock 50,000 Retained earnings 25,000 Treasury stock 11,500 Assuming the treasury shares were all purchased at the same price, the number of shares of treasury stock is: A.1,150. B.1,000. C.575. D.11,000. E.21,000.

Q: Corporations may buy back their own stock for any of the following reasons except to: A.Avoid a hostile take-over. B.Have shares available for a merger or acquisition. C.Have shares available for employee compensation. D.Maintain market value for the company stock. E.Allow management to assume the voting rights.

Q: The following data were reported by a corporation: Authorized shares "u00a6"u00a6.."u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 20,000 Issued shares "u00a6"u00a6.."u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 15,000 Treasury shares "u00a6"u00a6.."u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 3,000 The number of outstanding shares is: A.12,000. B.15,000. C.17,000. D.20,000. E.23,000.

Q: Torino Company has 10,000 shares of $5 par value, 4% cumulative and nonparticipating preferred stock and 100,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is: A.$1,000. B.$2,000. C.$3,000. D.$4,000. E.$0.

Q: Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Gracey's also has $600,000 of common stock outstanding. During its first year, the company paid cash dividends of $30,000. This dividend should be distributed as follows: A.$15,000 preferred; $15,000 common. B.$6,000 preferred; $24,000 common. C.$30,000 preferred; $0 common. D.$12,000 preferred; $18,000 common. E.$0 preferred; $30,000 common.

Q: Ultimate Sportswear has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $500,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $30,000. This dividend should be distributed as follows: A.$8,000 preferred; $22,000 common. B.$16,000 preferred; $14,000 common. C.$7,500 preferred; $22,500 common. D.$15,000 preferred; $15,000 common. E.$0 preferred; $30,000 common.

Q: Preferred stock that the issuing corporation has the option to retire by paying a specified amount to the preferred stockholders is called: A.Convertible preferred stock. B.Callable preferred stock. C.Premium stock. D.Cumulative preferred stock. E.Participating preferred stock.

Q: Preferred stock which confers rights to prior periods' unpaid dividends even if they were not declared is called: A.Noncumulative preferred stock. B.Participating preferred stock. C.Callable preferred stock. D.Cumulative preferred stock. E.Convertible preferred stock.

Q: Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares. At the time of the stock dividend, the market value per share was $12. The entry to record this dividend is: A.Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $36,000. B.Debit Retained Earnings $36,000; credit Common Stock Dividend Distributable $30,000; credit Paid-In Capital in Excess of Par Value, Common Stock $6,000. C.Debit Common Stock Dividend Distributable $36,000; credit Retained Earnings $36,000. D.Debit Retained Earnings $30,000; credit Common Stock Dividend Distributable $30,000. E.No entry is needed.

Q: Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record this dividend is: A.Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000. B.Debit Retained Earnings $135,000; credit Cash $135,000. C.Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000. D. Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000. E.No entry is made until the stock is issued.

Q: A corporation declared and issued a 15% stock dividend on October 1. The following information was available immediately prior to the dividend: Retained earnings "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. $750,000 Shares issued and outstanding "u00a6"u00a6"u00a6"u00a6"u00a6.. 60,000 Market value per share "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $15 Par value per share "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. $5 The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is: A.$45,000. B.$135,000. C.$(45,000). D.$(135,000). E.$0.

Q: A stock dividend is recorded with a transfer from: A.Contributed capital to retained earnings. B.Retained earnings to contributed capital. C.Retained earnings to assets. D.Contributed capital to assets. E.Assets to contributed capital.

Q: All of the following statements regarding stock dividends are true except: A.Directors can use stock dividends to keep the market price of the stock affordable. B.Stock dividends provide evidence of management's confidence that the company is doing well. C.Stock dividends do not reduce assets or equity. D.Stock dividends decrease the number of shares outstanding. E.Stock dividends transfer a portion of equity from retained earnings to contributed capital.

Q: On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and $1,500,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is: A.Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000. B.Debit Retained Earnings $750,000; credit Common Stock $750,000. C.Debit Retained Earnings $250,000; credit Common Stock $250,000. D.Debit Retained Earnings $250,000; credit Stock Split Payable $250,000. E.No entry is made for this transaction.

Q: Which of the following is true of a stock dividend? A.It is a liability on the balance sheet. B. The decision to declare a stock dividend resides with the shareholders. C.Transfers a portion of equity from retained earnings to a cash reserve account. D.Does not affect total equity, but transfer amounts between the components of equity. E.Reduces a corporation's assets and stockholders' equity.

Q: Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. The journal entry to record the dividend payment is: A.Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000. B.Debit Common Dividends Payable $4,000; credit Cash $4,000. C.Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500. D.Debit Common Dividends Payable $4,500; credit Cash $4,500. E.Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000.

Q: The date the directors vote to declare and pay a dividend is called the: A.Date of stockholders' meeting. B.Date of declaration. C.Date of record. D.Date of payment. E.Liquidating date.

Q: A premium on common stock: A.occurs when a corporation sells its stock for more than par or stated value. B.Is the difference between par value and issue price when the amount paid is below par. C.Represents profit from issuing stock. D.Represents capital gain on sale of stock. E.Is prohibited in most states.

Q: A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital in excess of par is: A.$ 100. B.$ 600. C.$1,000. D.$6,000. E.$7,000.

Q: Comfort Mattresses, Inc. sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share. The entry to record this transaction would be: A.Debit Cash $312,000; credit Common Stock $26,000; credit Paid-in Capital in Excess of Par Value, Common Stock $286,000. B.Debit Cash for $312,000; credit Common Stock $312,000. C.Debit Common Stock $26,000; debit Paid-in Capital in Excess of Par Value, Common Stock $286,000; credit Cash $312,000. D.Debit Cash $312,000; credit Stock Liability $286,000; credit Common Stock $26,000. E.Debit Common Stock $26,000; credit Cash $26,000.

Q: Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 400 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include: A.A debit to Organization Expenses for $4,000. B.A debit to Organization Expenses for $5,000. C.A credit to Common Stock for $5,000. D.A credit to Paid-in Capital in Excess of Par Value, Common Stock for $5,000. E.A debit to Paid-in Capital in Excess of Par Value, Common Stock for $2,000.

Q: Djarleen Company has 10,000 shares of $10 par preferred stock. It also has 250,000 shares of common stock outstanding, and its total stockholders' equity equals $4,000,000. The book value per common share is: A.$ 16.67. B.$ 16.00. C.$ 40.00. D.$ 15.60. E.$ 10.00.

Q: Wiggins Company has 1,000 shares of $10 par preferred stock. It also has 25,000 shares of common stock outstanding, and its total stockholders' equity equals $500,000. The book value per common share is: A.$ 16.00. B.$ 19.60. C.$ 19.96. D.$ 20.00. E.$ 10.00.

Q: The dividend yield is computed by dividing: A.Annual cash dividends per share by earnings per share. B.Earnings per share by cash dividends per share. C.Annual cash dividends per share by the market value per share. D.Market price per share by cash dividends per share. E.Cash dividends per share by retained earnings.

Q: The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the: A.Dividend payout ratio. B.Dividend yield. C.Price-earnings ratio. D.Current yield. E.Earnings per share.

Q: Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company declared a $27,000 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is: A.$1.65. B.$1.99. C.$1.31. D.$0.34. E.$4.89.

Q: A company made an error in calculating and reporting amortization expense in 2015. The error was discovered in 2016. The item should be reported as a prior period adjustment: A.on the 2015 statement of retained earnings. B.on the 2015 income statement. C.on the 2016 statement of retained earnings. D.on the 2016 income statement. E.accounted for with a cumulative "catch-up" adjustment in 2016.

Q: Changes in retained earnings are commonly reported in the: A.Statement of cash flows. B.Balance sheet. C.Statement of stockholders' equity. D.Multiple-step income statement. E.Single-step income statement.

Q: Companies report the cost of stock options in the: A.Statement of cash flows. B.Balance sheet. C.Statement of retained earnings. D.Income statement. E.No disclosure is required.

Q: Prior period adjustments are reported in the: A.Multiple-step income statement. B.Balance sheet. C.Statement of retained earnings. D.Statement of cash flows. E.Single-step income statement.

Q: Prior period adjustments to financial statements can result from: A.Changes in accounting estimates. B.Unacceptable accounting practices. C.Discontinued operations. D.Changes in tax law. E.Extraordinary items.

Q: A class of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called: A.Convertible stock. B.No-par stock. C.Callable stock. D.Noncumulative stock. E.Discounted stock.

Q: Stockholders' equity consists of which of the following? A.Long-term assets. B.Paid-in capital and retained earnings. C.Paid-in capital and par value. D.Retained earnings and cash. E.Premiums and discounts.

Q: When a corporation has only one class of stock, the stock is called A.Preferred stock. B.Common stock. C.Par value stock. D.Stated value stock. E.No-par value stock.

Q: A proxy is: A.A document that delegates a stockholder's voting rights to an agent. B.A contractual commitment by an investor to purchase unissued shares of stock. C.An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. D.The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation. E.An arbitrary amount assigned to no-par stock by the corporation's board of directors.

Q: The right of common shareholders to purchase their proportional share of any common stock later issued by the corporation is called a: A.Preemptive right. B.Proxy right. C.Right to call. D.Financial leverage. E.Voting right.

Q: Purchasing treasury stock reduces the corporation's assets and stockholders' equity by unequal amounts.

Q: Participating preferred stock has a feature that allows its holders to share with common shareholders in any dividends paid in excess of the percent or dollar amount stated on the preferred stock.

Q: Callable preferred stock gives a corporation the option of exchanging preferred shares into common shares at a specified rate.