Question : 11) The ratio that uses weighted-average number of shares of : 1230048

11) The ratio that uses weighted-average number of shares of common stock outstanding in the denominator is the:

A) earnings per share.

B) gross profit percentage.

C) price-earnings ratio.

D) current ratio.

12) Earnings per share (EPS) is calculated as:

A) the number of shares of common stock outstanding at the end of the year divided by net income.

B) net income divided by the number of shares of common stock outstanding at the end of the year.

C) net income divided by the average number of shares of common stock outstanding throughout the year.

D) the average number of shares of common stock outstanding throughout the year divided by net income.

13) When calculating earnings per share, preferred dividends are:

A) added to net income in the numerator of the EPS calculation.

B) added to common shares in the denominator of the EPS calculation.

C) subtracted from common shares in the denominator of the EPS calculation.

D) subtracted from net income in the numerator of the EPS calculation.

14) A company is required to report both basic and diluted earnings per share when the:

A) company’s capital structure includes convertible preferred stock.

B) company has extraordinary gains and losses.

C) company has discontinued operations.

D) company reports both net income and comprehensive income.

15) Wildcat Corporation reported net income for the current year of $700,000. Wildcat had 5,000 shares of $100 par value, 10% preferred stock outstanding and 40,000 shares of $1 par value common stock outstanding for the entire year. Earnings per share was:

A) $17.50

B) $18.75

C) $16.25

D) $16.67

16) Plymouth Corporation’s net income for the current $420,000. The corporation had outstanding 4,500 shares of 15%, $100 par value nonconvertible preferred stock and 15,000 shares of $10 par value common stock. No shares were issued or retired during the year. The amount of income to be used in the basic calculation of earnings per share is:

A) $487,500.

B) $420,000

C) $352,500

D) $270,000.

17) Which statement below is true regarding EPS and a company’s financial statements?

A) EPS based on the actual outstanding number of common shares of stock is called diluted EPS.

B) An EPS figure should be calculated and presented for each significant element of net income on the income statement.

C) The EPS calculation never takes into consideration preferred stock or preferred stock dividends.

D) EPS is based on the weighted-average shares of preferred stock outstanding for an accounting period.

18) Corporations with complex capital structures report:

A) basic and diluted EPS.

B) basic EPS.

C) diluted EPS.

D) nothing. EPS is not reported.

19) A prior-period adjustment that corrects income of a prior period requires an entry to:

A) a liability account.

B) an income statement account.

C) retained earnings.

D) an expense account.

20) Prior-period adjustments are reported on the current year’s:

A) income statement.

B) retained earnings statement.

C) balance sheet.

D) footnotes of the financial statements.