Accounting Seminar – 6

Accounting

Seminar – 6

1. 
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35. 
    Multiple-choice questions
    

21. 
    Prior period adjustments are reported in the:
    
    1. 
       Income statement
       
    2. 
       Balance sheet
       
    3. 
       Statement of retained earnings
       
    4. 
       Statement of cash flows
       
    5. 
       Notes to the financial statements
       
22. 
    Changes in accounting estimates are:
    
    1. 
       Considered accounting errors
       
    2. 
       Reported as prior period adjustments
       
    3. 
       Accounted for with a cumulative "catch-up" adjustment
       
    4. 
       Extraordinary items
       
    5. 
       Accounted for in current and future periods
       

21. 
    A company had a beginning balance in retained earnings of $43,000. It had net income of $6,000 and paid out cash dividends of $5,625 in the current period. The ending balance in retained earnings equals:
    
    1. 
       $108,625
       
    2. 
       $(12,625)
       
    3. 
       $11,375
       

4. 
   $43,375
   
5. 
   $(11,375)
   

24. 
    The statement of changes in stockholders' equity:
    
    1. 
       Is part of the statement of retained earnings
       
    2. 
       Shows only the ending balances in stockholders' equity
       
    3. 
       Describes changes in contributed capital and retained earnings subcategories
       
    4. 
       Does not include changes in treasury stock
       
    5. 
       Is reported by very few companies
       
25. 
    When all of the authorized shares have the same rights and characteristics, the stock is called:
    
    1. 
       "Preferred Shares" under both IFRS and GAAP
       

2. 
   "Common Shares" under both IFRS and GAAP
   
3. 
   "Plain Shares" under IFRS and "Common Shares" under GAAP
   
4. 
   "Simple Shares" under IFRS and "Pure Shares" under GAAP
   
5. 
   "Ordinary Shares" under IFRS and "Common Shares" under GAAP
   

24. 
    A company has 2,000 shares of $1 par value common stock and 200 shares of 5%, $110 par, non-cumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of the year was $500,000. Net income for the current year was $300,000. If the company paid a dividend of $2 per share on its common stock, what is the balance in Retained Earnings at the end of the year?
    

1. 
   $800,000
   
2. 
   $805,100
   
3. 
   $794,900
   
4. 
   $494,900
   
5. 
   $194,900
   

24. 
    A company has 3,000 shares of $2 par value common stock and 1,500 shares of 8%, $150 par, non-cumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of the year was $400,000. The Net Loss for the current year was $30,000. If the company paid a dividend of $1 per share on its common stock, what is the balance in Retained Earnings at the end of the year?
    

1. 
   $349,000
   
2. 
   $365,800
   
3. 
   $451,000
   
4. 
   $400,000
   
5. 
   $409,000
   

24. 
    A company has 5,000 shares of $1 par value common stock and 6,000 shares of 2%, $98 par, non-cumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of the year was $750,000. Net income for the current year was $400,000. If the company paid a dividend of $3 per share on its common stock, what is the balance in Retained Earnings at the end of the year?
    

1. 
   $1,123,240
   
2. 
   $1,135,000
   
3. 
   $1,150,000
   
4. 
   $735,000
   
5. 
   $723,240
   
24. 
    The amount of income earned per share of a company's common stock is known as:
    
    1. 
       Restricted retained earnings per share
       
    2. 
       Earnings per share
       
    3. 
       Continuing operations per share
       
    4. 
       Dividends per share
       
    5. 
       Book value per share
       
25. 
    Stock options are often used to encourage employees to:
    
    1. 
       Focus on company performance
       
    2. 
       Take a long-run approach
       
    3. 
       Remain with the company
       
    4. 
       To help save for retirement by participation in profit-sharing plans
       
    5. 
       All of the above
       

2

31. 
    Shamrock Company had net income of $30,000. On January 1, the number of shares of common stock outstanding were 8,000. On April 1, the company issued an additional 2,000 shares of common stock. There were no other stock transactions. The company's earnings per share is:
    

1. 
   $3.75
   
2. 
   $3.00
   
3. 
   $3.33
   
4. 
   $15.00
   
5. 
   $3.16
   

31. 
    Shamrock Company had net income of $30,000. On January 1, the number of shares of common stock outstanding were 8,000. On April 1, the company issued an additional 2,000 shares of common stock. The company declared a $2,700 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:
    

1. 
   $2.87
   
2. 
   $2.73
   
3. 
   $3.41
   
4. 
   $3.16
   
5. 
   $3.75
   

31. 
    A company had net income of $250,000. On January 1, the number of shares of common stock outstanding were 12,000. On May 1, the company issued an additional 9,000 shares of common stock. The company declared a $7,900 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:
    

1. 
   $13.45
   
2. 
   $13.89
   
3. 
   $11.53
   
4. 
   $26.90
   
5. 
   Amount cannot be determined as problem does not state if there are any dividends in arrears
   
31. 
    The price-earnings ratio is calculated by dividing:
    
    1. 
       Market value per share by earnings per share
       
    2. 
       Earnings per share by market value per share
       
    3. 
       Dividends per share by earnings per share
       
    4. 
       Dividends per share by market value per share
       
    5. 
       Market value per share by dividends per share
       

31. 
    A company has a market value per share of $73.00. Its net income is $1,750,000 and the weighted-average number of shares outstanding is 350,000. The company's price-earnings ratio equals:
    

1. 
   20.9
   
2. 
   4.2
   
3. 
   14.6
   
4. 
   20.0
   
5. 
   6.8
   

31. 
    A company has net income of $850,000. It also has 125,000 weighted-average common shares outstanding and a market value per share of $115. The company's price-earnings ratio equals:
    

1. 
   16.9
   
2. 
   14.7
   
3. 
   92.0
   
4. 
   13.5
   
5. 
   8.0
   

31. 
    A company has net income of $2,800,000. It also has 400,000 weighted-average common shares outstanding and a price-earnings ratio of 20. What is the market value per share of this company's stock?
    

1. 
   $2.85
   
2. 
   $140
   
3. 
   $20,000
   

3

4. 
   $.35
   
5. 
   $2,857.14
   

38. 
    A company has net income of $3,000,000. It has 600,000 weighted-average common shares outstanding and a price-earnings ratio of 17. What is the market value per share of this company's stock?
    
    1. 
       $5
       
    2. 
       $85
       
    3. 
       $176,470.58
       
    4. 
       $84.90
       
    5. 
       $17
       
39. 
    Dividend yield is the percent of cash dividends paid to common shareholders relative to the:
    

1. 
   Common stock's market value
   
2. 
   Earnings per share
   
3. 
   Investors' purchase price of the stock
   
4. 
   Amount of retained earnings
   
5. 
   Amount of cash
   

38. 
    The annual amount of cash dividends distributed to common shareholders relative to the common stock's market value is the:
    

1. 
   Dividend payout ratio
   
2. 
   Dividend yield
   
3. 
   Price-earnings ratio
   
4. 
   Current yield
   
5. 
   Earnings per share
   

35.