Homework answers / question archive /
Bakersfield College
ACG 2021
1)The result of a stock split is:
A larger number of more valuable shares
Bakersfield College
ACG 2021
1)The result of a stock split is:
A larger number of more valuable shares
Accounting
Share With
Bakersfield College
ACG 2021
1)The result of a stock split is:
- A larger number of more valuable shares.
- An increase in corporate assets.
- An increase in shareholders' equity.
- A larger number of less valuable shares.
- If a stock split occurred, when calculating the current year's EPS, the shares are treated as issued:
- At the end of the year.
- On the first day of the next fiscal year.
- At the beginning of the year.
- On the date of distribution.
- Stock options, rights, and warrants are different from convertible securities in that they:
- Typically increase cash upon exercise.
- Usually reduce total assets upon exercise.
- Often reduce liabilities upon exercise.
- Normally increase retained earnings upon exercise.
- The calculation of diluted earnings per share assumes that stock options were exercised and that the proceeds were used to buy treasury stock at:
- The average market price for the reporting period.
- The market price at the end of the period.
- The purchase price stated on the options.
- The stock's par value.
- When we take into account the dilutive effect of stock options, rights, and warrants in the calculation of EPS, the method used is called the:
- Optional method.
- If converted method.
- Dilution method.
- Treasury stock metho
- In computing diluted earnings per share, the treasury stock method is used for:
- Stock warrants.
- Stock splits.
- Reverse stock splits.
- Convertible preferred stock.
- The following information pertains to J Company's outstanding stock for 2016:
|
Common stock, $1 par
|
|
|
Shares outstanding, 1/1/2016
|
10,000
|
|
2 for 1 stock split, 4/1/2016
|
10,000
|
|
Shares issued, 7/1/2016
|
5,000
|
|
Preferred stock, $100 par, 7% cumulative
|
|
|
Shares outstanding, 1/1/2016
|
4,000
|
What is the number of shares J should use to calculate 2016 basic earnings per share? a. 20,000.
b. 22,500.
c. 25,000.
d. 27,000.
- When calculating diluted earnings per share, stock options:
- Are included if they are antidilutive.
- Should be ignored.
- Are included if they are dilutive.
- Increase the numerator while not affecting the denominator.
- Which of the following will require a recalculation of weighted-average shares outstanding for all years presented?
- Stock dividends and stock splits.
- Stock dividends but not stock splits.
- Stock splits but not stock dividends.
- Stock rights.
- All other things equal, what is the effect on earnings per share when a corporation acquires shares of its own stock on the open market?
- Decrease.
- No effect if the shares are held as treasury shares.
- Increase only if the shares are considered to be retired.
- Increase.
- If a stock dividend were distributed, when calculating the current year's EPS, the shares distributed are treated as having been issued:
- At the end of the year.
- At the beginning of the year.
- On the declaration date.
- On the date of distribution.
- Stock options do not affect the calculation of:
- Diluted EPS.
- Weighted-average common shares.
- The denominator in the diluted EPS fraction.
- Basic EPS.
- The calculation of diluted earnings per share assumes that stock options were exercised and that the proceeds were used to:
- Buy common stock as an investment.
- Retire preferred stock.
- Buy treasury stock.
- Increase net income.
Use the following information to answer questions .
During 2016, Falwell Inc. had 500,000 shares of common stock and 50,000 shares of 6% cumulative preferred stock outstanding. The preferred stock has a par value of $100 per share. Falwell did not declare or pay any dividends during 2016.
Falwell's net income for the year ended December 31, 2016, was $2.5 million. The income tax rate is 40%. Falwell granted 10,000 stock options to its executives on January 1 of this year. Each option gives its holder the right to buy 20 shares of common stock at an exercise price of $29 per share. The options vest after one year. The market price of the common stock averaged $30 per share during 2016.
- What is Falwell's basic earnings per share for 2016, rounded to the nearest cent? a. $3.14.
b. $4.40.
c. $5.00.
d. None of these answer choices is correct.
- What is Falwell's diluted earnings per share for 2016, rounded to the nearest cent? a. $3.14.
b. $4.90.
c. $4.34.
d. Cannot determine from the given information.
- On December 31, 2015, Beta Company had 300,000 shares of common stock issued and outstanding. Beta issued a 5% stock dividend on June 30, 2016. On September 30, 2016, 40,000 shares of common stock were reacquired as treasury stock. What is the appropriate number of shares to be used in the basic earnings per share computation for 2016?
a. 315,000.
b. 307,500.
c. 305,000.
d. 267,500.
