1. Extraordinary items are found on the income statement:
A) Before discontinued operations
B) After discontinued operations
C) Before income from continuing operations
D) After prior period adjustments
2. A company had 130,000 shares of common stock outstanding on January 1 and then sold 30,000 additional shares on March 30. Net income for the year was $495,625. What are earnings per share?
A) $3.10
B) $4.96
C) $3.25
D) $4.58
3. A company failed to make an adjusting entry in the prior year to accrue earned revenue. To correct this they should:
A) Correct last year’s statement by increasing net income
B) Correct this year’s statements with a prior period adjustment increasing beginning retained earnings
C) Correct this year’s statements with a prior period adjustment decreasing beginning retained earnings.
D) Correct this year’s statements with a prior period adjustment increasing ending retained earnings.
4. Which of the following would have no effect on Retained Earnings?
A) Declaration of a cash dividend
B) Declaration of a stock dividend
C) Declaration of a stock split.
D) A prior period adjustment
5. Vision Corporation's financial statements for the current year include the following:
On the basis of this information, net income for the current year is:
A) $1,478,400.
B) $ 744,000.
C) $1,364,400.
D) $1,122,000.
6. During the year 2007, Lin Wong Corporation suffered a $700,000 loss when its factory was destroyed in a flood. Assuming the corporate income tax rate is 34%, what amount will Lin Wong report as an extraordinary loss on its income statement for 2007? Assume floods are not common in this area.
A) $700,000
B) $462,000
C) $238,000.
D) Nothing, since this does not qualify as an extraordinary item.
7. On January 1, 2006, Patriot Corporation had 55,000 shares of $6 par value common stock outstanding. On March 31, 2006, Patriot issued an additional 10,000 shares in exchange for a building. What number of shares will be used in the computation of basic EPS for the year 2006?
A) 55,000.
B) 65,000.
C) 62,500.
D) 62,000.
8. Haverly Company reports net income of $480,000 for 2006 and declared a cash dividend of $1 per share on each of its 100,000 shares of common stock outstanding. Earnings per share for 2006 is:
A) $4.80 per share.
B) $1.00 per share.
C) $0.90 per share.
D) $3.80 per share.
9. On January 1, 2006, Action Corporation had 10,000 shares of $6 par value common stock and 10,000 shares of 8%, $100 par value convertible preferred stock outstanding. The preferred shares carried a 3 for 1 conversion privilege. On October 1, 2006, all of the preferred shares were converted to common. What number of shares must Action use in computing basic EPS at December 31, 2006?
A) 17,500.
B) 40,000.
C) 7,500.
D) 10,000.