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True or False
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1
Discontinued operations are the net operating results of a segment of a company that has been or is being sold.
A)True
B)False
2
A segment of the business represents a separate and distinct line of business activity or that provides a service to a distinct category of customers.
A)True
B)False
3
Discontinued operations need not be a segment of the business in order to qualify for separate presentation in the income statement.
A)True
B)False
4
The income taxes relating to irregular items (discontinued operations and extraordinary items) are included in the income tax from continuing operations.
A)True
B)False
5
Transactions and events that are unusual in nature and occur infrequently are called extraordinary items.
A)True
B)False
6
Discontinued operations are unusual in nature and are considered to be extraordinary items.
A)True
B)False
7
A material (significant) loss from theft would not be considered an extraordinary item.
A)True
B)False
8
Because of the abuse in reporting unusual gains and losses to the benefit of the reporting entity, the AICPA has adopted a comprehensive list of extraordinary items.
A)True
B)False
9
Costs related to reorganizing and downsizing a company to make the company more efficient are called restructuring charges.
A)True
B)False
10
The classification of a specific event is a matter of following accounting principles.
A)True
B)False
11
The resulting loss from discontinued operations is shown in the income statement net of income tax benefit.
A)True
B)False
12
Computing earnings per share by dividing the company's net income by the number of common shares outstanding is acceptable when the corporation has common stock only, and the number of shares has not changed during the year.
A)True
B)False
13
When calculating the earnings per share, the annual dividend on cumulative preferred stock is deducted.
A)True
B)False
14
If the company had 10,000 common shares outstanding for the first three months of the year, 12,000 common shares outstanding for the next three months of the year, and 15,000 shares outstanding for the last six months of the year, the weighted-average number of common shares outstanding is 13,000.
A)True
B)False
15
When there are preferred dividends in arrears, the dividends in arrears and the current year's cumulative dividends are deducted in the earnings per share computation.
A)True
B)False
16
Earnings per share is less significant than the earnings from continuing operations when evaluating the possible future operating results.
A)True
B)False
17
The price earnings (P/E) ratio is computed by dividing the current stock price per share of common stock by the par value per share of common stock.
A)True
B)False
18
The result of dividing the market price of a share of common stock by the annual earnings per share of common stock is called the price-earnings ratio.
A)True
B)False
19
A company with net income of $450,000, 200,000 weighted-average shares of common shares outstanding, and 10,000 shares of $5 cumulative preferred stock outstanding, would have earnings per share of $2.00 per share of common stock.
A)True
B)False
20
Diluted earnings per share are computed under the assumption that all convertible securities had been converted into additional common shares at the beginning of the current period.
A)True
B)False
21
Net income applicable to the common stock divided by the weighted-average number of common shares outstanding during the year is called the basic earnings per share.
A)True
B)False
22
A distribution of cash by a corporation to its stockholders is called a cash dividend.
A)True
B)False
23
A person who buys common stock before the date of record is always entitled to receive the dividend that has already been declared.
A)True
B)False
24
The date on which a person must be listed as a shareholder in order to be eligible to receive a dividend is called the date of record.
A)True
B)False
25
A journal entry is required for three of the four dates (declaration, ex-dividend, record, and payment) associated with a cash dividend.
A)True
B)False
26
One of the three requirements to declare a cash dividend is having adequate retained earnings.
A)True
B)False
27
A cash dividend that exceeds the balance in the Retained Earnings account is called a negative dividend.
A)True
B)False
28
A stock dividend is a distribution of additional shares to common stockholders in proportion to their holdings.
A)True
B)False
29
When recording a small stock dividend, the debit to the Retained Earnings account must be equal to the current market value of the stock.
A)True
B)False
30
A small stock dividend increases total stockholders' equity by the market value of the shares.
A)True
B)False
31
The Stock Dividend to Be Distributed account is reported as a current liability in the balance sheet
A)True
B)False
32
A stock split of 3:1 will decrease the par value to 1/3 of its previous par value and increase the number of common shares outstanding by 200%. (= (300-100)/100).
A)True
B)False
33
A major difference between a stock split and a large stock dividend is the effect they have on the par value of the resulting common shares outstanding.
A)True
B)False
34
In the statement of retained earnings, both cash dividends and stock dividends are reported as deductions from the beginning balance of retained earnings.
A)True
B)False
35
A correction in the current year of a material error in the earnings reported in the financial statements of a prior year is called a prior period adjustment.
A)True
B)False
36
Restrictions of retained earnings are commonly journalized to prevent retained earnings from falling below a designated amount.
A)True
B)False
37
An amount credited to the Unrealized Holding Gain account represents comprehensive income.
A)True
B)False
38
Net income plus or minus certain changes in financial position that are recorded as direct adjustments to stockholders' equity, rather than as elements in the determination of net income, are called undiluted income.
A)True
B)False
39
An expanded version of a statement of retained earnings summarizing the changes during the year in all stockholders' equity accounts is called the statement of stockholders' equity.
A)True
B)False
40
Additional paid-in capital resulting from a stock dividend does not appear in the stockholders' equity section of the balance sheet.
A)True
B)False
41
Neither the conversion of preferred stock to common stock nor a stock dividend will change total stockholders' equity.
A)True
B)False
42
The purchase of Treasury Stock will reduce the ending balance of Retained Earnings.
A)True
B)False
43
In the series of enforcement action brought against Just of Feet by the SEC, it was determined that those individuals who had confirmed non existing receivables to external auditors were not guilty of a criminal offense, but the companies they represented were held accountable.
A)True
B)False





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