Question

The column headings on a statement of stockholders' equity best represent

a.the column headings on the retained earnings statement.

b.the row designations in the Stockholders' Equity section of the balance sheet.

c.the column designations in the Stockholders' Equity section of the balance sheet.

d.None of these choices are correct.

Which of the following statements is not correct with regard to prior period adjustments?

a.Prior period adjustments are errors found in a period after the error occurred.

b.Prior period adjustments arise from mathematical mistakes in a previous period.

c.Prior period adjustments are reported as an adjustment to the ending balance of retained earnings in the current period.

d.All of these choices are correct.

Wave Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $5,000 on equipment. Also, during the current year, the company earned net income of $15,000 and declared cash dividends of $5,000. Compute the year-end retained earnings balance.

a.$30,000

b.$25,000

c.$35,000

d.$40,000

All of the following statements are true regarding earnings per share (EPS) except

a.EPS cannot be calculated if a company has no preferred stock.

b.EPS is calculated as (Net Income ? Preferred Dividends)/Average Number of Common Shares Outstanding.

c.EPS is sometimes called basic earnings per share.

d.corporations whose stock is publicly traded must report EPS on their income statements.

Corporations whose stock is traded in a public market must report earnings per share on their

a.retained earnings statement.

b.income statement.

c.balance sheet.

d.Earnings per share is not reported on the financial statements.

The numerator in the earnings per share calculation

a.represents only those earnings available to preferred stockholders.

b.represents only those earnings available to common stockholders.

c.represents earnings available to common and preferred stockholders.

d.None of these choices are correct.

Financial statement data for the year ending December 31 for the Power Company are as follows:

Net income	$680,000
Preferred dividends	$20,000
Average number of common shares outstanding	120,000	shares

Compute the earnings per share for the year.

a.$5.83

b.$5.67

c.$5.50

d.None of these choices are correct.

Answer 1

ans 1
Option
b.the row designations in the Stockholders' Equity section of the balance sheet.
is correct
In a Balance Sheet the stockholder equity section comes under the main head
Liabilities and Stockholder equity, it in the row designation represents
column heading on the statement of shareholder equity
ans 2
option c.Prior period adjustments are reported as an adjustment to the ending balance of retained earnings in the current period
These are not adjustment to the ending balance of retained earnings these are the error which occurred in previpus year and are recitified after the beginning balance of retained earnings are entered
ans 3
Year end balance
$25000-5000+15000-5000	30000
Option A is correct $30000
ans 4
Option A.EPS cannot be calculated if a company has no preferred stock.
EPS can be calculated weather the company kas preferred stock or not
as EPS is caculated for common stockholders and the formula is
(Net Income ? Preferred Dividends)/Average Number of Common Shares Outstanding.
ans 5
b.income statement
ans 6
b.represents only those earnings available to common stockholders.
As EPS is calculated for common stockholder
ans 7
EPS=(680000-20000)/120000	5.5
Opyion C $5.5 is correct