71.Which of the following would not be used in computing diluted earnings per share?
A. Preferred stock.
B. Convertible bonds.
C. Stock options.
D. Weighted-average number of shares of common stock outstanding during the year.
72.On January 1, 2015, Edward 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, 2015, all of the preferred shares were converted to common. What number of shares must Edward use in computing basic earnings per share at December 31, 2015?
A. 17,500.
B. 40,000.
C. 7,500.
D. 10,000.
(10,000 × 9/12) + (40,000 × 3/12) = 17,500
73.For the current year, Voque Company reported basic earnings per share of $8 and diluted earnings per share of $3. The difference between these figures is attributable to outstanding shares of convertible preferred stock. If all this preferred stock had actually been converted into common stock at the beginning of the current year, Voque Company would have reported only one earnings per share amount, which would have been:
A. $8.
B. $5.
C. $3.
D. Cannot be determined.
74.On January 1, 2015, Alice Corporation had 20,000 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. As of December 31, 2015, none of the preferred shares had been converted. What number of shares must Alice use in computing diluted earnings per share at December 31, 2015?
A. 10,000.
B. 20,000.
C. 30,000.
D. 50,000.
20,000 + (10,000 × 3) = 50,000
75.A small stock dividend is recorded at:
A. Market value.
B. Book value.
C. Par value.
D. No amount, just a memorandum entry is required.
76.Stock splits:
A. Allow management to conserve cash.
B. Give stockholders more shares.
C. Cause no change in total assets, liabilities, or stockholders’ equity.
D. Allow management to conserve cash, give stockholders more shares, and cause no change in total assets, liabilities, or stockholders’ equity.
77.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.
78.On January 31, 2015, Village Bank had 500,000 shares of $2 par value common stock outstanding. On that date, the company declared a 14% stock dividend when the market price of the stock was $37 per share. The immediate effect of this dividend upon Village Bank was:
A. A reduction in cash of $2,590,000.
B. A reduction in retained earnings of $2,590,000.
C. A reduction in retained earnings of $140,000.
D. A liability to the stockholders of $140,000.
$37(500,000 × .14) = $2,590,000
79.Large stock dividends tend to:
A. Increase stock prices.
B. Have no effect upon stock prices.
C. Keep stock prices down.
D. Decrease total assets.
80.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.
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