7:46
5) The numerator in calculating earnings per share is reduced for:
A) Cumulative preferred dividends ONLY if declared
B) Common stock dividends
C) Noncumulative preferred dividends that are declared
D) Common dividends
6) 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) Net income.
C) The number of shares of common stock issued, and outstanding
D) The amount of cash dividends declared or paid to common stockholders.
7) Melville Enterprises had 25,000 shares of $10 cumulative preferred stock, $100 par, and
100,000 shares of $1 par common stock outstanding throughout the year. Net income for the
year was $980,000. The cumulative preferred dividends were not declared. Earnings per share
amounted to:
A) $5.30.
B) $7.30.
C) $2.30.
D) $1.00
8) Which of the following is correct:
A) Basic earnings per share should exceed diluted earnings per share.
B) Basic earnings per share should be equal to diluted earnings per share.
C) Diluted earnings per share should exceed basic earnings per share.
D) Basic earnings per share would not be presented with diluted earnings per share
9) A small stock dividend is recorded at:
A) Par value.
B) Market value.
C) Book value.
D) No amount, just a memorandum entry is required.
10) Stock splits:
A) Have no effect on TOTAL stockholders' equity and TOTAL market capitalization
B) Do not give stockholders more shares.
C) Forces management to pay out cash.
D) Causes changes in assets, liabilities, and stockholders' equity
A-2
63%
