Question : 54. The amount of earnings per share usually computed: A. For both preferred : 1229416

54. The amount of earnings per share is usually computed: 
A. For both preferred and common stock.
B. For common stock by deducting the dividends on preferred stock from net income and dividing the remaining amount by the weighted average number of common shares outstanding.
C. By dividing net income by the combined number of preferred and common shares.
D. On the basis of the number of shares outstanding at year-end, regardless of changes in the number of shares during the year.

55. Which of the following statistics is generally computed for both common and preferred stock? 
A. Earnings per share.
B. Price-earnings ratio (p/e ratio).
C. Annual dividend per share.
D. Retained earnings per share.

56. Earnings per share figures are shown in the income statement: 
A. For income before extraordinary items and for income from continuing operations, as well as for net income.
B. For common stock as well as for preferred stock.
C. For all publicly owned, as well as for all privately held, corporations.
D. As an optional disclosure for all corporations, and may be omitted completely or disclosed in a footnote at the option of the issuing corporation.

57. The numerator in calculating earnings per share is reduced for: 
A. Preferred dividends.
B. Common dividends.
C. Common stock dividends.
D. Any form of dividend.

58. All things being equal, if investors expect earnings to increase substantially from current levels, the price/earnings ratio will: 
A. Be quite low.
B. Be quite high.
C. Not change.
D. Not be affected by income expectations.

59. The common stock of Securetech Corporation consistently sells at a market price of 20 times earnings (i.e., at a p/e ratio of 20). What would be the most likely effect of a 10 cent increase in Securetech’s basic EPS? 
A. An increase in market price of approximately 10 cents per share.
B. An increase in market price of approximately $2 per share.
C. A reduction in the p/e ratio due to the larger EPS.
D. Nothing, since market price reflects expectations of future earnings.

60. Which of the following has no effect on the computation of earnings per share for the current period? 
A. The amount of cash dividends declared or paid to preferred stockholders.
B. The amount of cash dividends declared or paid to common stockholders.
C. Net income.
D. The number of shares of common stock authorized.

61. Diluted earnings per share is a hypothetical computation to warn stockholders what could happen if: 
A. Loss contingencies turn out adversely.
B. Convertible securities are converted into shares of common stock.
C. Extraordinary losses were to recur.
D. Consideration was given to the loss from operations discontinued during the current period.

62. To receive the next cash dividend, an investor must purchase the stock before the: 
A. Dividend declaration date.
B. Ex-dividend date.
C. Date of record.
D. Payment date announced by the board of directors.

63. Dividends become a liability of a corporation: 
A. On the date the board of directors declares the dividend.
B. On the date of record.
C. On the date payment is to be made.
D. When cumulative preferred stock dividends are in arrears.