ch12

Stock splits:

• Allow management to conserve cash.

• Give stockholders more shares.

• Cause no change in total assets, liabilities, or stockholders' equity.

• Allow management to conserve cash, give stockholders more shares, and cause no change in total assets, liabilities, or stockholders' equity.

It would be reasonable to assume that:

• Basic earnings per share should exceed diluted earnings per share.

• Diluted earnings per share should exceed basic earnings per share.

• Basic earnings per share should be equal to diluted earnings per share.

• Basic earnings per share would not be presented with diluted earnings per share.

A small stock dividend is recorded at:

• Market value.

• Book value

• Par value

• No amount, just a memorandum entry is required.

Treasury stock appears as:

• An asset account.

• A liability account.

• An expense account.

• An equity account.

Extraordinary items are found on the income statement:

• Before discontinued operations.

• After discontinued operations.

• Before income from continuing operations.

• After prior period adjustments.

A company failed to make an adjusting entry in the prior year to accrue earned revenue. To correct this they should:

• Correct last year's statement by increasing net income.

• Correct this year's statements with a prior period adjustment increasing beginning retained earnings.

• Correct this year's statements with a prior period adjustment decreasing beginning retained earnings.

• Correct this year's statements with a prior period adjustment increasing ending retained earnings.

A prior period adjustment is a correction made to:

• Retained earnings of the beginning of the period.

• Retained earnings at the end of the period.

• Net income of the current year.

• Only to last years' financial statements.

The price-earnings ratio is the:

• Book value of a share of common stock divided by EPS.

• Market price of a share of common stock divided by EPS.

• Par value of a share of common stock divided by EPS.

• Market price divided by book value of a share of stock.

Which of the following would have no effect on Retained Earnings?

• Declaration of a cash dividend.

• Declaration of a stock dividend.

• Declaration of a stock split.

• A prior period adjustment.

Doogle Corporation sold a segment of its operations in 2009 and suffered an extraordinary loss in 2010. Which of the following would be the most useful in attempting to predict Doogle's performance for 2011?

• Doogle's income from continuing operations in 2009 and 2010.

• Doogle's net income in 2009 and 2010.

• Doogle's total assets at the end of 2010.

• Doogle's retained earnings at the end of 2010.