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4/19/2014
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Course 171019- Accounting for Earnings per Share
  Final Exam
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171019v - Accounting for Earnings per Share

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Accounting & Auditing
6 CPE Credit Hours

4/19/2014
Final Exam
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Read 'Chapter 1: Earnings per Share - Simple Capital Structure' & answer the following question(s):
1. In computing earnings per share for a simple capital structure, if the preferred stock is cumulative, the amount that should be deducted as an adjustment to the numerator (earnings) is the
2. In computing earnings per share, the equivalent number of shares of convertible preferred stock are added as an adjustment to the denominator (number of shares outstanding). If the preferred stock is cumulative, which amount should then be added as an adjustment to the numerator (net earnings)?
3. In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are
4. At December 31, 2007, Meyer Company had 500,000 shares of common stock issued and outstanding, 400,000 of which had been issued and outstanding throughout the year and 100,000 of which were issued on October 1, 2007. Net income for the year ended December 31, 2007, was $510,000. What should be Meyer's 2007 earnings per common share, rounded to the nearest penny?
5. Loeb Co. had 600,000 shares of common stock outstanding on January 1, issued 84,000 shares on May 1, purchased 42,000 shares of treasury stock on September 1, and issued 36,000 shares on November 1. The weighted average shares outstanding for the year is
6. What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively?
7. When computing diluted earnings per share, convertible bonds are
8. In the diluted earnings per share computation, the treasury stock method is used for options and warrants to reflect assumed reacquisition of common stock at the average market price during the period. If the exercise price of the options or warrants exceeds the average market price, the computation would
9. Under the treasury stock method, the diluted earnings per share (DEPS) calculation is based on the assumptions that call options and warrants issued by the reporting entity and outstanding for the entire year were exercised at the
10. On January 2, 2007, Dane Co. issued at par $300,000 of 9% convertible bonds. Each $1,000 bond is convertible into 30 shares. No bonds were converted during 2007. Dane had 50,000 shares of common stock outstanding during 2007. Dane's 2007 net income was $160,000 and the income tax rate was 30%. Dane's diluted earnings per share for 2007 would be (rounded to the nearest penny)
11. At December 31, 2007, Maris Co. had 800,000 shares of common stock outstanding. In addition, Maris had 300,000 shares of preferred stock which were convertible into 500,000 shares of common stock. During 2007, Maris paid $300,000 cash dividends on the common stock and $200,000 cash dividends on the preferred stock. Net income for 2007 was $1,700,000 and the income tax rate was 40%. The diluted earnings per share for 2007 is (rounded to the nearest penny)
12. Which one of the following statement is not true regarding earnings per share?
13. With respect to the computation of earnings per share, which of the following would be most indicative of a simple capital structure?
14. Warrants exercisable at $20 each to obtain 50,000 shares of common stock were outstanding during a period when the average market price of the common stock was $25. Application of the treasury stock method for the assumed exercise of these warrants in computing diluted earnings per share will increase the weighted average number of outstanding shares by
15. Antidilutive securities
16. Due to the importance of earnings per share information, it is required to be reported by all Public Companies Non Public Companies
17. Dilutive convertible securities must be used in the computation of
18. In the case of stock options, ______________________ must be used in determining diluted earnings per share.
19. In computing earnings per share, the equivalent number of shares of convertible preferred stock are added as an adjustment to the denominator (number of shares outstanding). If the preferred stock is cumulative, which amount should then be added as an adjustment to the numerator (net earnings)?
20. On January 1 2007, Kensington Corporation had 25,000 shares of common stock outstanding.at a $5 par value. On March 1, the Corporation sold an additional 50,000 shares on the open market at $25 per share. The Corporation issued a 20% stock
21. Jett Corp. had 600,000 shares of common stock outstanding on January 1, issued 900,000 shares on July 1, and had income applicable to common stock of $1,260,000 for the year ending December 31, 2007. Earnings per share of common stock for 2007 would be
22. At December 31, 2007, Marshall Company had 500,000 shares of common stock issued and outstanding, 400,000 of which had been issued and outstanding throughout the year and 100,000 of which were issued on October 1, 2007. Net income for the year ended December 31, 2007, was $765,000. What should be Marshall's 2007 earnings per common share, rounded to the nearest penny?
23. Assume there are two dilutive convertible securities. The one that should be used first to recalculate earnings per share is the security with the
24. When computing diluted earnings per share, convertible securities are
25. The if-converted method of computing earnings per share data assumes conversion of convertible securities as of the
26. Angelo Co. had 800,000 shares of common stock outstanding on January 1, issued 112,000 shares on May 1, purchased 56,000 shares of treasury stock on September 1, and issued 48,000 shares on November 1. The weighted average shares outstanding for the year is
27. If the exercise price of the warrant is lower than the market price of the stock,
28. A stock option will be antidilutive
29. Which of the following items is not included in EPS disclosures?
30. A reconciliation between pro forma and U.S. GAAP EPS information is required by the SEC. T F
Read 'Chapter 2: Preferred Stock Dividends' & answer the following question(s):
Read 'Chapter 3: Calculating EPS with a Simple Capital Structure' & answer the following question(s):
Read 'Chapter 4: Stock Dividends and Stock Splits' & answer the following question(s):
Read 'Chapter 5: Calculating EPS with a Complex Capital Structure' & answer the following question(s):
Read 'Chapter 6: Summary of Dilutive Securities' & answer the following question(s):
Read 'Chapter 7: Earnings-per-Share Fractions' & answer the following question(s):
Read 'Chapter 8: Earnings per Share Overview' & answer the following question(s):
Read 'Chapter 9: Presentation of EPS' & answer the following question(s):
Read 'Chapter 10: Hewlett Packard 2004 Annual Report' & answer the following question(s):
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