26 May Question Chapter 17 QUIZ—Earnings Per Share and Retained Earnings
Question
Chapter 17 QUIZ—Earnings Per Share and Retained Earnings
MULTIPLE CHOICE
QUESTION # 1
1. Which one of the following indicators is intended to show the potential impacts of possible future events on a corporation’s performance?
| a. | basic earnings per share |
| b. | cash flow per share |
| c. | diluted earnings per share |
| d. | price/earnings ratio |
QUESTION # 2
6. Basic earnings per share is computed as
| a. | Net Income / Total Number of Common Shares Outstanding |
| b. | (Net Income- Preferred Dividends) / Total Number of Common Shares Outstanding |
| c. | (Net Income- Preferred Dividends) / Weighted-Average Number of Common Shares Outstanding |
| d. | Net Income / Weighted-Average Number of Common Shares Outstanding |
QUESTION # 3
8. Which of the following items would not be included in a basic earnings per share calculation?
| a. | undeclared dividends on noncumulative preferred stock |
| b. | declared dividends on noncumulative preferred stock |
| c. | undeclared dividends on cumulative preferred stock |
| d. | declared dividends on cumulative preferred stock |
QUESTION # 4
9. On January 1, 2010, Walters Corporation had 24,000 shares of common stock outstanding. On April 1, it reacquired 2,400 shares; on July 1, it issued 10,800 shares; on October 1, it issued another 9,600 shares; and on December 1, it reacquired 600 shares. The weighted average number of common shares outstanding for 2010 was
| a. | 26,950 |
| b. | 28,900 |
| c. | 29,950 |
| d. | 41,400 |
QUESTION # 5
10. On January 1, 2010, Brennen Corporation had 20,000 shares of common shares outstanding. During the year, it sold another 2,600 shares on July 1 and reacquired 600 shares on November 1. The corporation earned $337,600 net income. The company also has 15,000 shares of $10 par value, 6%, cumulative preferred stock on which no dividends have been declared for the last two years. The basic earnings per share for the year is
| a. | $15.92 |
| b. | $15.65 |
| c. | $15.50 |
| d. | $15.08 |
QUESTION # 6
12. On January 1, a corporation had 10,380 shares of common stock outstanding. On August 1, it sold an additional 6,000 shares. During the year, dividends of $4,800 and $56,000 were declared and paid on the common and preferred stock, respectively. Net income for the year was $240,000. The basic earnings per share for the year was
| a. | $10.56 |
| b. | $11.23 |
| c. | $14.29 |
| d. | $18.63 |
QUESTION # 7
13. On January 1, 2010, a corporation had 10,380 shares of common stock outstanding, and on June 1, it reacquired 6,000 shares. Despite a net loss for the year of $180,000, the company declared and paid cash dividends of $24,000 and $28,000 on common and preferred stock, respectively. The earnings per share for 2010 was
| a. | ($33.72) |
| b. | ($30.24) |
| c. | ($22.10) |
| d. | ($18.60) |
QUESTION # 8
15. On January 1, 2010, Smith Company had 21,000 shares of common stock outstanding and issued an additional 4,500 shares on May 1. The company declared and paid a cash dividend of $30,000 and earned $330,000 net income. The earnings per share for the year was
| a. | $15.00 |
| b. | $13.75 |
| c. | $12.94 |
| d. | $12.50 |
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