Question : 64. When a company reports both diluted earnings per share and : 1229417

64. When a company reports both diluted earnings per share and basic earnings per share: 
A. Basic EPS would be greater than fully diluted EPS.
B. Basic EPS would be less than fully diluted EPS.
C. Basic EPS may be either greater or less than fully diluted EPS.
D. Both should never be shown – only one would be reported.

65. A liquidating dividend: 
A. Occurs when a corporation distributes shares of its own stock as a dividend, rather than cash.
B. Occurs whenever a corporation distributes non-cash assets as a dividend to its stockholders.
C. Represents a distribution of a corporation’s profits to the stockholders.
D. Represents a return of invested capital to a corporation’s owners, the stockholders.

66. Dividends are first recorded and retained earnings are reduced on: 
A. The ex-dividend date.
B. The date of record.
C. The date of declaration.
D. The date of payment.

67. As a result of a 5% stock dividend: 
A. Total stockholders’ equity decreases by 5%.
B. The par value per share decreases by 5%.
C. The number of shares owned by each stockholder increases by 5%, but total stockholders’ equity does not change.
D. Both the number of shares outstanding and the total stockholders’ equity increase by 5%.

68. If a company presents both the basic and diluted earnings per share, the price/earnings ratio is based on: 
A. The basic figure.
B. The diluted figure.
C. The average of the basic and diluted figures.
D. A combination of the basic and diluted figures.

69. A large stock dividend and a stock split are similar in that they both cause a: 
A. Reduction in total stockholders’ equity.
B. Reduction in retained earnings.
C. Reduction in the par value per share.
D. Reduction in the market price per share.

70. Supervox Corporation declared a 3-for-2 common stock split, but this transaction was erroneously recorded as a 50% common stock dividend. As a result: 
A. Retained earnings is understated.
B. The total dollar amount of stockholders’ equity is overstated.
C. The corporate records do not show the correct number of shares of common stock outstanding.
D. The common stock account is understated.

71. Declaration and distribution of a stock dividend cause each of the following effects except: 
A. An increase in the number of shares of stock outstanding.
B. A decrease in retained earnings.
C. A decrease in total assets of the issuing corporation.
D. An increase in legal capital of the issuing corporation.

72. A 2-for-1 stock split: 
A. Is accounted for in the same way as a 100% stock dividend.
B. Increases the number of outstanding shares of common stock, but par value per share remains the same as before the split.
C. Is recorded by transferring the par value of additional shares from retained earnings to the common stock account.
D. Should logically cause the market price per share to drop by approximately 50%.

73. If a material accounting error was made in a prior year, that error: 
A. Should be reflected on the current year’s income statement.
B. Should be reflected, net of taxes, on the retained earnings statement.
C. Should be reflected as a change in accounting principle.
D. Should be considered as an extraordinary item, and shown, net of taxes, on the income statement.