ACCT 302 Conceptual MC Earnings Per Share

d.Yes/No

A convertible bond issue should be included in the diluted earnings per share computation as if the bonds had been converted into common stock, if the effect of its inclusion is Dilutive/Antidilutive: a.No/Yes b.No/No c.Yes/Yes d.Yes/No

c.should be ignored in all earnings per share calculations.

Antidilutive securities: a.are those whose inclusion in earnings per share computations would cause basic earnings per share to exceed diluted earnings per share. b.include stock options and warrants whose exercise price is less than the average market price of common stock. c.should be ignored in all earnings per share calculations. d.should be included in the computation of diluted earnings per share but not basic earnings per share.

b.smaller earnings per share adjustment.

Assume there are two dilutive convertible securities. The one that should be used first to recalculate earnings per share is the security with the: a.smaller earnings adjustment. b.smaller earnings per share adjustment. c.greater earnings adjustment. d.greater earnings per share adjustment.

EARNINGS PER SHARE PREP

EARNINGS PER SHARE 18 Q's

c.Only the current year's dividend.

If preferred stock is cumulative, and dividends have not been declared in the past two years or in the current year, what amount should be deducted from net income in the EPS calculation?: a.Only the dividends in arrears. b.Nothing should be deducted because no dividends were declared. c.Only the current year's dividend. d.Both the current year's dividend and the dividends in arrears.

D making the periodic contributions to a funding agency to ensure that funds are available to meet retirees' claims

In a defined-benefit plan, the process of funding refers to: a. determining the amount that might be reported for pension expense. b. determining the projected benefit obligation c. determining the accumulated benefit obligation d. making the periodic contributions to a funding agency to ensure that funds are available to meet retirees' claims

c.are used to calculate the number of common shares repurchased at the average market price, when computing diluted earnings per share.

In applying the treasury stock method to determine the dilutive effect of stock options and warrants, the proceeds assumed to be received upon exercise of the options and warrants: a.are not used to calculate the number of common shared repurchased at the average market price, when computing diluted earnings per share b.are added, net of tax, to the numerator of the calculation for diluted earnings per share. c.are used to calculate the number of common shares repurchased at the average market price, when computing diluted earnings per share. d.are disregarded in the computation of earnings per share if the exercise price of the options and warrants is less than the ending market price of common stock.

a.considered outstanding at the beginning of the earliest year reported.

In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are: a.considered outstanding at the beginning of the earliest year reported. b.weighted by the number of days outstanding. c.weighted by the number of months outstanding. d.considered outstanding at the beginning of the year.

d.none of these answer choices is correct.

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: a.preferred dividends in arrears. b.preferred dividends in arrears times (one minus the income tax rate). c.annual preferred dividend times (one minus the income tax rate). d.none of these answer choices is correct.

d.deducted from net income whether declared or not

In determining diluted earnings per share, dividends on nonconvertible cumulative preferred stock should be: a.added back to net income whether declared or not. b.deducted from net income only if declared. c.disregarded. d.deducted from net income whether declared or not

a.be antidilutive.

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: a.be antidilutive. b.reflect the excess of the number of shares assumed issued over the number of shares assumed reacquired as the potential dilution of earnings per share. c.fairly present diluted earnings per share on a prospective basis. d.fairly present the maximum potential dilution of diluted earnings per share on a prospective basis.

b.be antidilutive.

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: a.fairly present diluted earnings per share on a prospective basis. b.be antidilutive. c.fairly present the maximum potential dilution of diluted earnings per share on a prospective basis. d.reflect the excess of the number of shares assumed issued over the number of shares assumed reacquired as the potential dilution of earnings per share.

b.Net income.

Of what will the numerator of the diluted EPS calculation consist when convertible preferred stock is being included?: a.Net income + Preferred dividends (Net of tax effect). b.Net income. c.Net income + Preferred dividends. d.Net income - Preferred dividends.

d.antidilutive securities.

The diluted EPS computation considers all of the following except the impact of: a.convertible securities. b.stock warrants. c.stock options. d.antidilutive securities.

b.stock options and warrants.

The treasury stock method of computing incremental shares applies to: a.convertible bonds only. b.stock options and warrants. c.convertible preferred stock only. d.all convertible securities.

a.Decrease and increase

What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively?: a.Decrease and increase b.Increase and decrease c.Decrease and no effect d.Increase and no effect

a.assumed converted only if they are dilutive.

When computing diluted earnings per share, convertible bonds are: a.assumed converted only if they are dilutive. b.ignored. c.assumed converted only if they are antidilutive. d.assumed converted whether they are dilutive or antidilutive.

d.Basic and diluted EPS.

Which earnings per share amounts are reported in a complex capital structure?: a.Basic and simple EPS. b.Basic EPS only. c.Diluted EPS only. d.Basic and diluted EPS.

b.(Net income - Preferred dividends) ÷ Weighted average number of shares outstanding

Which of the following is the formula for computing EPS?: a.(Net income - Preferred dividends) ÷ Average number of shares outstanding b.(Net income - Preferred dividends) ÷ Weighted average number of shares outstanding c.(Net income + Preferred dividends) ÷ Weighted average number of shares outstanding d.Net income ÷ Number of shares outstanding

c.Ownership interest consisting solely of common stock.

With respect to the computation of earnings per share, which of the following would be most indicative of a simple capital structure?: a.Common stock, preferred stock, and convertible securities outstanding in lots of even thousands. b.Earnings derived from one primary line of business. c.Ownership interest consisting solely of common stock. d.Ownership interest not consisting solely of common stock.