Question :
191. The following information pertains to the Kathy Company for the : 1245824
191. The following information pertains to the Kathy Company for the year ended December 31, Year 2:
Common shares outstanding
1,000,000
Stated value per share
$10.00
Market price per share
$80.00
Year 1 dividends paid per share
$ 4.00
Year 2 dividends paid per share
$ 5.00
Earnings per share
$ 8.00
The price-earnings ratio for Kathy’s common stock is A. 8 timesB. 9 timesC. 10 timesD. 12 timesE. 14 times
192. Earnings per share of common stock (assuming no convertible or other potentially dilutive securities outstanding) A. equals net income attributable to common stock divided by the weighted average number of common shares outstanding during the period.B. equals net income attributable to common stock divided by the number of common shares outstanding at the beginning of the period.C. equals net income attributable to common stock divided by the number of common shares outstanding at the end of the period.D. all of the above.E. none of the above.
193. (CMA adapted, Jun 96 #18) The book value per share calculation of a corporation is usually significantly different from the market value of the stock’s selling price due to the A. use of accrual accounting in preparing financial statements.B. use of the matching principle in preparing financial statements.C. omission of the number of preferred shares outstanding at year end in the calculation.D. use of historical costs in preparing financial statements.E. none of the above.
194. Publicly held firms that apply U.S. GAAP or IFRS must show earnings per common share data. Firms reporting multiple categories of income items must disclose earnings per common share A. in the body of the statement of cash flows.B. in the body of the balance sheet.C. for the total, only.D. for each reported category.E. in the footnotes to the financial statements.
195. Earnings per common share result from dividing net income A. minus preferred stock dividends by the weighted-average number of outstanding common shares during the accounting period. B. by the weighted-average number of outstanding common shares during the accounting period. C. minus common stock dividends by the end-of-year number of outstanding common shares. D. minus preferred stock dividends by the end-of-year number of outstanding common shares. E. by the end-of-year number of outstanding common shares.
196. Publicly held firms that apply U.S. GAAP or IFRS must show earnings per common share data in the A. body of the income statement.B. footnotes to the financial statements.C. management discussion and analysis.D. body of the balance sheet.E. body of the statement of cash flows.
197. Correction of a material error occurring in prior periods is reported as A. an adjustment of earnings of the current period, only.B. a retroactive restatement of prior years earnings, only.C. a retroactive restatement of prior years earnings and an adjustment to the beginning balance of retained earnings for the current period. D. an adjustment of earnings of the current and future periods.E. an adjustment of earnings of the current period, and an adjustment to the ending balance of retained earnings for the current period.
198. A separate section of the income statement reporting information about discontinued operations is included A. only if the sale resulted in a loss.B. in every income statement prepared in accordance with the GAAP.C. any time a major business asset is sold.D. if a firm sells, during the period, or plans to sell, during the next period, a major division or segment of its business. E. if a firm has sold during the previous period, or plans to sell during the next period, a major division or segment of its business.
199. Accrual accounting requires frequent, ongoing changes in estimates. Which of the following is/are not true? A. As time passes and conditions change, new information becomes available that causes management to change the estimates required to apply accounting principles. B. Firms do not recalculate revenues and expenses of previous periods to incorporate new information involving estimates.C. Changes in estimates do not always relate to recurring accrual accounting measurements.D. Examples of changes in estimates include the amount of uncollectible accounts and the useful lives of depreciable assets.E. Firms report the income effect of these items in the retained earnings as a direct adjustment.
200. U.S. GAAP and IFRS require firms to account for correction of errors, if material, by A. restating net income of prior periods and adjusting the beginning balance in Retained Earnings for the current period.B. restating net income of prior periods and adjusting the ending balance in Retained Earnings for the current period.C. restating net income of the current period and adjusting the beginning balance in Retained Earnings for the current period.D. restating net income of the current period and adjusting the ending balance in Retained Earnings for the current period.E. restating net income of the current period, only.
