QUIZ 1: Interim Financial Reporting real property tax.
Of this amount, P120,000 was allocated to the third quarter of
1. For interim financial reporting, a loss from earthquake occurring in the
second quarter should be
Recognized in the second quarter
Recognized ratably over all four quarters with the first quarter being restated
Disclosed by a note only in the second quarter
Recognized ratably over the last three quarters
2. In January 2020, ABC Co. paid property taxes on its factory building for the
calendar year 2020 in the amount of P240,000. In the first week of April 2020,
ABC made unanticipated major repairs to the plant equipment at a cost of
P600,000. These repairs will benefit operations for the remainder of the
calendar year. How should these expenses be reflected in ABCs quarterly
financial reports?
1st quarter – 60,000; 2nd quarter – 260,000; 3rd quarter – 260,000; 4th quarter –
260,000
1st quarter – 210,000; 2nd quarter – 210,000; 3rd quarter – 210,000; 4th quarter –
210,000
1st quarter – 60,000; 2nd quarter – 660,000; 3rd quarter – 60,000; 4th quarter –
60,000
1st quarter – 240,000; 2nd quarter – 600,000; 3rd quarter – 0; 4th quarter – 0
3. For external reporting purposes, it is appropriate to use estimated gross
profit rates to determine the cost of goods sold for
Interim financial reporting
Should not be reported
Year-end Financial Reporting
Both Interim Financial Reporting and Year-end Financial Reporting
4. ABC Co. reported P950,000 net income for the quarter ended September 20,
2020 which included the following after-tax items:
A P600,000 expropriation gain realized in May 2020 was allocated equally to the
second, third and fourth quarters of 2020.
A P160,000 cumulative effect loss resulting from a change in inventory
valuation method was recognized on August 31, 2020.
In addition, the entity paid P480,000 on February 1, 2020, for 2020 calendar-year
2020.
What is the net income for the quarter ended September 30, 2020?
1,030,000
910,000
1,150,000
1,110,000
5. XYZ made the scheduled annual repairs of its plant facilities in the first
quarter and paid for it during the second quarter. The repairs clearly benefited
the entire year. When should the repairs be expensed?
An allocated portion in each of the last three quarters
In full in the first quarter
An allocated portion in each quarter of the year
In full in the second quarter
6. PAS 34 presumes that anyone reading the interim financial reports will
Understand all Philippine Financial Reporting Standards
Have access to the most recent annual financial statements
Not make decisions based on the reports
Have access to the record of the entity
7. During the second quarter of 2020, ABC Co. sold a piece of equipment at a
gain of P120,000. What portion of the gain should ABC report on its statement
of comprehensive income for the second quarter of 2020?
P60,000
P40,000
P0
P120,000
8. ABC Co. prepares quarterly interim financial reports. The company sells its
products through sales agents who are paid a fixed monthly salary and a
commission of 5% that is paid at year-end. Sales for the first quarter were
P20,000,000. However, in the second quarter, the employee’s union negotiated
that agent’s commissions be increased to 10% and be applied as of the
beginning of the current year. Sales in the second were P25,000,000. What
would be the sales commission expense of ABC Co. reported in the second
quarter’s interim financial statements?
P2,000,000
P1,000,000
P3,500,000
P2,500,000
9. When revenues are received seasonally, cyclically, or occasionally within a
financial year
Such information should not be disclosed and the total estimated revenue for the year
should be recognized equally over the interim periods
Such financial information should be disclosed and the total estimated revenue for the
year should be recognized equally over interim periods
Such information need not be disclosed in the interim financial report and revenue
should be recognized in the period realized
Such information should be disclosed in the interim financial report but revenue
should be recognized in the period realized
10. PAS 34 Interim Financial Reporting, encourages publicly traded entities to
provide interim financial reports
On a quarterly basis
Whenever the entity wishes
At least at the end of the half year and within 60 days of the end of interim period
Within a month of the half yearend
11. In 2020, ABC Company started operations with an inventory costing
P200,000. For the first quarter of 2020, the purchases and sales were as follows:
The goods are sold at 25% above cost. For interim statement purposes, the
inventory at the end of January, February, and March, respectively are
P58,000; P30,000; P130,000
P70,000; P94,000; P0
P192,000; P408,000; P604,000
P187,500; P70,000; P207,750
12. ABC Co. has calculated that total depreciation expense for the year ending
December 31, 2020 will amount to P600,000 and that 2020 year-end bonuses to
employees will total P1,200,000. In ABC Co.’s interim statement of
comprehensive income for the six months ended June 30, 2020, what is the
total amount of expense relating to these two items that should be reported?
P900,000
P1,800,000
P0
P300,000
13. An entity prepares quarterly interim financial reports in accordance with
PAS 34. The entity sells goods which are subject to warranty. The company
made a provision for warranty in the first quarter for the year 2020 at 5% of
sales, as the company in the past in the past experienced a 5% claim on
warranty based on sales. However, in the second quarter, a modification in the
design of the product resulted to a design fault and the company expected the
warranty claims to increase to 10% for the whole year 2020. Sales in the first
and second quarters were P10million and P15million, respectively. What would
be the provision charged in the second quarter’s interim financial statements?
P1.25million
P0.75million
P2.0million
P1.5million
14. Interim financial reports should be included as a minimum
A complete set of financial statements complying with PAS 1
A condensed set of financial statements and selected notes
A statement of financial position, a statement of comprehensive income, and a
statement of cash flows
A statement of financial position and statement of comprehensive income only
15. Conceptually, interim financial statements can be described as emphasizing
Relevance over comparability
Comparability over verifiability
Timelines over reliability 1,375,000

Reliability over relevance P1,200,000

16. If an entity does not prepare interim financial reports, then P1,550,000

The annual financial statements are deemed not to comply with IFRS P1,400,000

The annual financial statements will not be acceptable under local legislation 20. Insurance costs may be accrued or deferred to provide an appropriate
expense in each period for
Interim financial reports should be included in the annual financial statements
Year-end Financial Reporting
The annual financial statements’ compliance with IFRS is not affected
Interim financial reporting
17. ABC Co. incurs cost unevenly throughout the financial year. Advertising
costs of P2million were incurred on February 29, 2020 and staff bonuses are Should not be reported
paid at yearend based on sales. Staff bonuses are expected to be around
P30million for the year. Of this amount, P7million would relate to the quarter Both Interim Financial Reporting and Year-end Financial Reporting
ending March 31, 2020. What cost should be included for the quarter ended
March 31, 2020?

Advertising cost – P0.5million ; Staff bonuses – P7.5million

Advertising cost – P0.5million ; Staff bonuses – P7.0million

Advertising cost – P2million ; Staff bonuses – P7.5million
Advertising cost – P2million ; Staff bonuses – P7.0million
18. In March 2020, ABC Co. estimated that its year-end bonus to executives
would be P320,000 for 2020. The actual obligation paid for the yearend bonus
for 2019 was P290,000. The estimate for 2020 is subject to yearend adjustment.
What amount, if any, of expense should be reflected in ABC’s quarterly
financial statement of comprehensive income for the three months ended
March 31, 2020?
QUIZ 2: Statement of Cash Flows
1.Meredith Grey’s Company's cash account decreased by $6,000. Net cash
provided by investing activities was $13,000. Net cash used in financing
activities was $30,000. On the statement of cash flows, the net cash flow
provided by (used in) operating activities was
$11,000.
$(23,000).

P 320,000 $(17,000).

P0 $(6,000).

P 72,500 2. A change in deferred taxes is considered to be a financing activity on the

statement of cash flows.
P 80,000
Select one:
19. An entity’s accounting year-ends on December 31, and it is currently
preparing interim financial statements for the half year to June 30, 2020. The FALSE
price of its product tend to vary. At June 20, 2020, it has inventories of 100,000
units, at a cost per unit of P14. The net realizable at June 30, 2020 is P12 per 3. The data given below are from the accounting records of the Grey-Sloan
unit. The expected net realizable value of these inventories at December 31, Company:
2020 is P15.50 per unit. At what amount should these inventories be presented
in the interim statement of financial position at June 30, 2020?   Net Income (accrual basis) ............... $45,000
  Depreciation Expense ..................... $ 9,000 Which of the following statements is/are true

  Decrease in Accounts Payable ............. $ 2,500 6. The following changes in account balances and other information for 2017
were taken from the accounting records of Richard Webber Company:
  Decrease in Merchandise Inventory ........ $ 3,000
Net Changes for 2017
  Increase in Long-term Liabilities ........ $10,000
Debit Credit
  Sale of Capital Stock for cash ........... $30,000 Cash 2,000
  Increase in Accounts Receivable .......... $ 4,500 Accounts Receivable 1,900
Inventory 2,400
Based on this information, the cash provided by operating activities using the
indirect method would be: Land 1,700
23,00
$55,000. Buildings and Equipment
0
$60,000. Accumulated Depreciation 4,500
Accounts Payable 1,600
$58,000.
Salaries Payable 600
$50,000. Bonds Payable 5,000
4. George O’Malley’s Company reported on its income statement sales for the Ordinary Shares, no par 3,000
year just ended of $435,000. Sales during the year adjusted to the cash basis on Retained Earnings
its statement of cash flows constructed using the direct method were $460,000.
Carlton Company recorded the following account balances: 25,50
25,500
0
January 01, 2021 December 31, 2021 Other information:
A/R ? 35,000 Net income was 9,900. Dividends were declared and paid. Land was sold for
Prepaid 1,700; a building was purchased for 23,000. No land was purchased and no
12,000 16,000 buildings and equipment were sold. Bonds payable were issued at the end of
Expense
the year. Two hundred shares were issued for P15 per share. The beginning
Inventory 22,000 19,000 cash balance was 4,800.
Based on this information, the balance in Accounts Receivable at the beginning of the
year was: Cash flows from investing activities in 2017

$59,000. 1,700

$10,000 21,300

$60,000. (23,000)

$63,000. (21,300)

5. Cash dividends paid to the owners of a company would be classified as part
of financing activities on the statement of cash flows.
Under the indirect method of determining the net cash provided by operating
activities on the statement of cash flows, increases in current liabilities such as
accounts payable are subtracted from net income.
7. An increase in the prepaid expenses account of $1,000 over the course of a
year would be shown on the company's statement of cash flows prepared
under the indirect method as:
a deduction from net income of $1,000 in order to arrive at net cash provided by
operating activities.
a deduction of $1,000 under financing activities. Inventory 2,400
an addition to net income of $1,000 in order to arrive at    net cash provided by Land 1,700
operating activities. 23,00
Buildings and Equipment
an addition of $1,000 under financing activities.
0
Accumulated Depreciation 4,500
8. All of the following should be classified under the operating section of the
Accounts Payable 1,600
statement of cash flows EXCEPT:
Salaries Payable 600
a decrease in prepaid insurance. Bonds Payable 5,000
an increase in accumulated depreciation. Ordinary Shares, no par 3,000
Retained Earnings
a purchase of land in exchange for a long-term note.
25,50
a decrease in inventory.
25,500
0
9. The sale of equipment at a gain would be shown on the statement of cash
flows prepared under the indirect method in which of the following manners? Other information:

Cash received would be shown under Investing Activities and the gain would not
appear on the statement of cash flows.
Cash received would be shown under Investing Activities and the gain would be
deducted from net income.
Net income was 9,900. Dividends were declared and paid. Land was sold for
1,700; a building was purchased for 23,000. No land was purchased and no
buildings and equipment were sold. Bonds payable were issued at the end of
the year. Two hundred shares were issued for P15 per share. The beginning
cash balance was 4,800.

Cash received would be shown under Investing Activities and the gain would be The cash balance at the end of 2017 is
added to net income.
4,800
Cash received would be shown as an adjustment to net income and the gain would
not appear on the statement of cash       flows. (2,000)

10. Which of the following would be considered a "use" of cash for purposes of 2,800
constructing a statement of cash flows?
2,000
an increase in prepaid expenses
12. The ending balance of accounts receivable was $52,500. Sales, adjusted to a
an increase in accrued liabilities. cash basis using the direct method on the statement of cash flows, were
$425,000. Sales reported on the income statement were $444,000. Based on this
an increase in accounts payable information, the beginning balance in accounts receivable was:

 an increase in accumulated depreciation. $39,500.

11. The following changes in account balances and other information for 2017 $66,500.
were taken from the accounting records of Richard Webber Company:
$33,500.
Net Changes for 2017 $71,500.
Debit Credit
13. Under the indirect method of determining net cash provided by operating
Cash 2,000
activities, which of the following would be recorded as a deduction from net
Accounts Receivable 1,900 income?
An increase in deferred tax liability Cash 2,000
A decrease in accounts payable Accounts Receivable 1,900
Inventory 2,400
An increase in salaries payable.
Land 1,700
A decrease in accounts receivable. 23,00
Buildings and Equipment
14. Izzie Stevens’ Company operating expenses for last year totaled $180,000.
0
During the year the company's prepaid expense account balance decreased by Accumulated Depreciation 4,500
$5,000 and accrued liabilities increased by $8,000. Depreciation charges for the Accounts Payable 1,600
year were $12,000. Based on this information, operating expenses adjusted to a
cash basis under the direct method on the statement of cash flows would be: Salaries Payable 600
Bonds Payable 5,000
$155,000.
Ordinary Shares, no par 3,000
$179,000. Retained Earnings
$205,000. 25,50
25,500
0
$181,000. Other information:

15. When using the indirect method to prepare the statement of cash flows, Net income was 9,900. Dividends were declared and paid. Land was sold for
amortization of goodwill should be presented as a: 1,700; a building was purchased for 23,000. No land was purchased and no
buildings and equipment were sold. Bonds payable were issued at the end of
deduction from net income. the year. Two hundred shares were issued for P15 per share. The beginning
cash balance was 4,800.
cash flow from investing activities.
The net cash flow from operating activities amounted to
cash flow from financing activities.
17,800
addition to net income.
16,500
16. Alex Karev’s  Company sold equipment with a net book value of $125,000
for $110,000 in cash. This equipment was originally purchased for $275,000. 9,900
What will be the net effect of this transaction on the net cash provided by
investing activities on the statement of cash flows? 15,900

A net deduction of $165,000 from cash. 18. The net cash provided by operating activities on the statement of cash flows
will generally be different than net income.
A net deduction of $15,000 from cash.
Under the direct method of determining net cash provided by operating
A net addition of $165,000 to cash. activities on the statement of cash flows, the net income figure is adjusted for
changes in current assets and liabilities
A net addition of $15,000 to cash
Which of the following statements is/are true?
17. The following changes in account balances and other information for 2017
were taken from the accounting records of Richard Webber Company: 19. Every transaction classified as "source" or "use" of cash for purposes of
constructing a statement of cash flows involves a change in some noncash
Net Changes for 2017 balance sheet account.
Debit Credit
In the statement of cash flows, increases in a company's capital stock accounts
are generally treated as a "source" rather than as a "use" of cash. Which of the
following statements is/are true
Both
20. Last year Christina Yang Company reported a cost of goods sold of $70,000.
Inventories decreased by $12,000 during the year, and accounts payable
increased by $8,000. The company uses the direct method to determine the net
cash provided by operating activities on the statement of cash flows. The cost
of goods sold adjusted to a cash basis would be:
Statement 2: Administration costs paid in cash and loan repayment at face
value are both classified as monetary items
Only statement 1 is true
3. Statement 1: In hyperinflationary economy, monetary items are restated
applying the general price index 
Statement 2: Monetary items consist of cash and cash equivalents only for the
purpose of adjusting financial statements for changes in the general price
index

$50,000. Both statements are false

$58,000. 4. ABC Company provided the following information for the current year 

$90,000 Monetary Assets 

$62,000 January 1- 250,000

QUIZ 3: HYPERINFLATION AND CURRENT COST ACCOUNTING December 31- 700,000

1. ABC Company reported the following information with respect to cost of Monetary Liabilities 
goods sold for the current year: 
January 1- 100,000
Units  Historical Cost December 31- 300,000
Inventory- January 1 20,000 540,000
Increase in net monetary items as restated to constant peso- 3,500,000
Purchases 55,000 2,890,000
Goods available for sale 75,000 3,430,000 Decrease in net monetary items as restated to constant peso- 3,000,000
Inventory- December 31 (25,000) (955,000)
General Price Index
Cost of Goods Sold 50,000 2.475,000
The current cost per unit of inventory was P58 on January 1 and P72 on January 1- 125
December 31.
December 31- 300
In the income statement  restated to current cost, what is the cost of goods
sold for the current year? What is the gain or loss on purchasing power?

3,250,000 460,000 gain

3,600,000 250,000 loss

2,900,000 460,000 loss

2,475,000 250,000 gain

2. Statement 1:Accumulated depreciation and warranty liability are both 5. Statement 1: In current cost financial statements general price level gains or
classified as non monetary items losses are recognized 
Statement 2: In current cost financial statements amounts are always stated in Inventory- January 1 20,000 540,000
common purchasing power
Purchases 55,000 2,890,000
Both statements are false Goods available for sale 75,000 3,430,000
6. ABC Company provided the following historical income statement data for Inventory- December 31 (25,000) (955,000)
2020:  Cost of Goods Sold 50,000 2.475,000
The current cost per unit of inventory was P58 on January 1 and P72 on
Sales 8,000,000 December 31.
Inventory, January 1 2,200,000
In the statement of financial position restated to current cost, what is the
Purchases 5,200,000 inventory on December 31?
Inventory, December 31 3,000,000
1,800,000
Distribution and administrative expenses 1,700,000
Depreciation 100,000 1,080,000
Income Tax 500,000 1,450,000
The pertinent index numbers are 
1,625,000
January 1, 2018- 100
9. ABC Company provided the following historical income statement data for
January 1, 2019- 100 2020: 

December 31, 2019- 120 Sales 8,000,000

December 31, 2020- 200  Inventory, January 1 2,200,000
Purchases 5,200,000
Depreciable assets  were acquired on January 1, 2018 
Inventory, December 31 3,000,000
What is the amount of cost of goods sold after restatement for hyperinflation? Distribution and administrative expenses 1,700,000
5,500,000 Depreciation 100,000
Income Tax 500,000
6,750,000 The pertinent index numbers are 
Answer not given January 1, 2018- 100
4,400,000 January 1, 2019- 100
7. Statement 1:Purchasing power gain or loss results from both monetary December 31, 2019- 120
assets only
December 31, 2020- 200 
Statement 2: The gain or loss on the net monetary position in a
hyperinflationary economy shall be included in retained earnings Depreciable assets  were acquired on January 1, 2018 
Both statements are false If the entity is operating in a hyperinflationary economy, what amount should
be reported as gross income?
8. ABC Company reported the following information with respect to cost of 3,250,000
goods sold for the current year: 
3,600,000
Units  Historical Cost
Answer not given 14. Statement 1: During the period of inflation in which a liability account
balance remains constant, a purchasing power gain if the item is a monetary
4,500,000 liability occurs. 

10. Statement 1: When an entity prepares financial statements on a current cost
basis, cost of goods sold is computed by multiplying number of units sold with
the current cost at the end of the year 
Statement 2: When an entity prepares financial statements on a current cost
basis, accumulated depreciation is based on the average current cost of the
depreciable property
Statement 2: During the period of deflation in which a liability account balance
remains
Both statements are true
15. ABC Company was operating in a hyperinflationary economy and provided
the following statement of financial position on December 31, 2020

Both statements are false Cash and Cash Equivalents 4,250,000

11. Statement 1: In a hyperinflationary economy, amounts not expressed in the Inventory 3,000,000
measuring unit current at the end of reporting period are restated by applying Equipment (net) 1,400,000
either general price index or specific price index 
Land 4,500,000
Statement 2: Financial statements that are expressed under a stable monetary Current Liabilities (all monetary) 2,000,000
unit are nominal peso financial statements
Noncurrent liabilities (all monetary) 6,500,000
Only statement 2 is true Share Capital  3,000,000
12. Statement 1: One of the indicators that hyperinflation exists is when
Retained Earnings 1,650,000
inflation rates have exceeded interest rates in three successive rates

Statement 2: An entity that wishes to present information about the effect of The pertinent index numbers are 
changing prices in a hyperinflationary economy should report this information
in the body of financial statements January 1, 2018- 100

Only statement 2 is true January 1, 2019- 100

13. ABC Company provided the following liabilities and equity in December 31, 2019- 120
hyperinflationary economy: 
December 31, 2020- 200 
Before Restatement After Restatement  The land and equipment were acquired on January 1, 2018 
Liabilities 3,000,000 3,500,000
The entity was organized on January 1, 2018
Share Capital 6,000,000 9,500,000
Revaluation Surplus 2,000,000 ? What is the balance of retained earnings after adjusting for hyperinflation?
Retained Earnings 2,500,000 ? 3,300,000
Total Liabilities and Equity 13,500,000 20,000,000
What is the amount of revaluation surplus after restatement? Answer not given

0 5,300,000

4,500,000 1,650,000

2,000,000 16. Statement 1: The restatement of historical peso financial statements to

reflect the general price level change results in presenting assets at current
6,000,000 replacement cost 
Statement 2: Price level financial statements measure current value December 31, 2020- 200 

Both statements are false The land and equipment were acquired on January 1, 2018 

17. ABC Company reported the following information with respect to cost of The entity was organized on January 1, 2018
goods sold for the current year: 
What is the amount of total liabilities after restatement for hyperinflation?
Units  Historical Cost
Answer not given
Inventory- January 1 20,000 540,000
Purchases 55,000 2,890,000 10,625,000
Goods available for sale 75,000 3,430,000 8,500,000
Inventory- December 31 (25,000) (955,000)
17,000,000
Cost of Goods Sold 50,000 2.475,000
The current cost per unit of inventory was P58 on January 1 and P72 on 19. ABC Company was operating in a hyperinflationary economy and provided
December 31. the following statement of financial position on December 31, 2020

What is the unrealized holding gain on inventory for the current year?
Cash and Cash Equivalents 4,250,000
495,000 Inventory 3,000,000
Equipment (net) 1,400,000
670,000
Land 4,500,000
125,000 Current Liabilities (all monetary) 2,000,000
945,000 Noncurrent liabilities (all monetary) 6,500,000
Share Capital  3,000,000
18. ABC Company was operating in a hyperinflationary economy and provided
the following statement of financial position on December 31, 2020 Retained Earnings 1,650,000

Cash and Cash Equivalents 4,250,000

The pertinent index numbers are 
Inventory 3,000,000
Equipment (net) 1,400,000 January 1, 2018- 100

Land 4,500,000 January 1, 2019- 100

Current Liabilities (all monetary) 2,000,000
December 31, 2019- 120
Noncurrent liabilities (all monetary) 6,500,000
Share Capital  3,000,000 December 31, 2020- 200 
Retained Earnings 1,650,000 The land and equipment were acquired on January 1, 2018 

The entity was organized on January 1, 2018

The pertinent index numbers are 
What is the amount of total assets after restatement for hyperinflation?
January 1, 2018- 100
21,050,000
January 1, 2019- 100
19,800,000
December 31, 2019- 120
13,150,000
Answer not given   893,000
20. Statement 1: During the period of inflation, an account balance remains
constant. With respect to this account,a purchasing power loss will be
recognized if the account is a monetary asset
Statement 2: During the period of inflation, an account balance remains
constant. With respect to this account,a purchasing power gain will be
recognized if the account is a monetary liability   and $600,000 cash dividends on the preferred stock. Net income for the year
Both statements are true
QUIZ 4: BASIC AND DILUTED EPS
Stock warrants outstanding should be classified as
 assets.
reductions of capital contributed in excess of par value.
None of these
liabilities.
Statement 1: When stock dividends or stock splits occur, companies must
restate the shares outstanding after the stock dividend or split, in order to
compute the weighted-average number of shares.
    Statement 2:  If a stock dividend occurs after year-end, but before issuing the
financial statements, a company must restate the weighted-average number of
shares outstanding for the year
False, True
Statement 1: Earnings per share for a company with a simple capital structure
is calculated by dividing net income less preferred dividends by the number of
shares outstanding at yearend. 
Statement 2: A corporation includes current dividends on cumulative preferred
stock in the numerator when calculating basic earnings per share whether or
not they have been declared
False, True
Atticus Linc Co. had 800,000 shares of common stock outstanding on January
1, issued 126,000 shares on May 1, purchased 63,000 shares of treasury stock
on September 1, and issued 54,000 shares on November 1. The weighted
average shares outstanding for the year is
872,000
914,000
851,000
At December 31, 2020, Miranda Bailey had 2,000,000 shares of common stock
outstanding. On January 1, 2021, Miranda issued 500,000 shares of preferred
stock which were convertible into 1,000,000 shares of common stock. During
2021, Tatum declared and paid $1,800,000 cash dividends on the common stock
ended December 31, 2021, was $6,000,000. Assuming an income tax rate of
30%, what should be diluted earnings per share for the year ended December
31, 2021? (Round to the nearest penny.)
$2.50
$1.80
$2.00
$3.00
The diluted earnings per share calculation includes:
all dilutive and antidilutive potential common shares.
only potential common shares that are dilutive.
all dilutive and antidilutive convertible securities.
any convertible security that is antidilutive.
Statement 1: A corporation must consider the impact of all potential common
shares in computing diluted earnings per share. 
Statement 2: Stock options are always included in diluted earnings per share
calculations. 
True, False
Richard Webber Co. had 300,000 shares of common stock issued and
outstanding at December 31, 2012. No common stock was issued during 2013.
On January 1, 2013, Didde issued 200,000 shares of nonconvertible preferred
stock. During 2013, Richard Webber declared and paid $150,000 cash dividends
on the common stock and $120,000 on the preferred stock. Net income for the
year ended December 31, 2013 was $930,000. What should be Richard Webber’s
2013 earnings per common share?
$2.20
$3.10
$2.70
$2.60
Antidilutive securities
should be included in the computation of diluted earnings per share but not basic
earnings per share.
include stock options and warrants whose exercise price is less than the average
market price of common stock.
are those whose inclusion in earnings per share computations would cause basic
earnings per share to exceed diluted earnings per share.
should be ignored in all earnings per share calculations
Lexie Grey Corp. had 600,000 shares of common stock outstanding on January
1, issued 900,000 shares on July 1, and had income applicable to common
stock of $1,680,000 for the year ending December 31, 2012. Earnings per share
of common stock for 2012 would be
$1.33
$1.60
$2.80
$1.87
At December 31, 2021 and 2020, Jackson Avery. had 180,000 shares of common
stock and 10,000 shares of 6%, $100 par value cumulative preferred stock
outstanding. No dividends were declared on either the preferred or common
stock in 2021 or 2020. Net income for 2021 was $480,000. For 2021, earnings per
common share amounted to
$2.33
$2.67
$2.11
$2.00.
ABC Corporation has a complex capital structure. Its basic earnings per share
for the 2011 fiscal year was $2.03 and its diluted earnings per share was $1.98.
Rules for financial statement disclosure require that:
only the basic earnings per share be disclosed.
only the diluted earnings per share be disclosed.
neither earnings per share amount be disclosed.
both the basic and the diluted earnings per share be disclosed
When applying the treasury stock method for diluted earnings per share, the
market price of the common stock used for the repurchase is the 
price at the end of the year.
price at the beginning of the year.
none of these
average market price.
April Kepner Company had 750,000 shares of common stock issued and
outstanding at December 31, 2012. On July 1, 2013 an additional 750,000 shares
were issued for cash. Fugate also had stock options outstanding at the
beginning and end of 2013 which allow the holders to purchase 225,000 shares
of common stock at $20 per share. The average market price of Fugate's
common stock was $25 during 2013. What is the number of shares that should
be used in computing diluted earnings per share for the year ended December
31, 2013?
1,305,000
1,181,250
1,170,000
1,545,000
Addison Montgomery Corporation reported net income of $34,400 in 2011. The
company declared dividends of $4,000 on preferred stock and $12,000 on
common stock. At the beginning of 2011, there were 8,000 shares of common
stock outstanding. An additional 2,000 shares of common stock were issued on
June 30 and another 2,000 shares were added on October 1. In 2011, the basic
earnings per share was:
$2.53.
$1.94
$3.62
$3.20.
When computing diluted earnings per share, convertible securities are
recognized only if they are antidilutive
recognized whether they are dilutive or antidilutive.
recognized only if they are dilutive Basic earnings per share for 2013 is (rounded to the nearest penny)

ignored $3.63

Statement 1: When a company has a complex capital structure, it must report $4.05
both basic and diluted earnings per share. 
$3.32
    Statement 2:  In computing diluted earnings per share, stock options are
considered dilutive when their option price is greater than the market price. $3.76.

True, False

A company had 20,000 shares of common stock outstanding on January 1; on

May 1, 4,000 shares were issued; on July 17, a 20% stock dividend was issued;
and on September 1, 3,000 additional shares were issued. The denominator to
be used to compute earnings per share is:

28,400

28,200

31,800

23,667

Arizona Robbins, Incorporated, has 4,200,000 shares of common stock

outstanding on December 31, 2020. An additional 800,000 shares of common
stock were issued on April 1, 2021, and 400,000 more on July 1, 2021. On
October 1, 2021, Arizona issued 20,000, $1,000 face value, 8% convertible
bonds. Each bond is convertible into 20 shares of common stock. No bonds
were converted into common stock in 2021. What is the number of shares to be
used in computing basic earnings per share and diluted earnings per share,
respectively?

5,000,000 and 5,000,000

5,400,000 and 6,200,000

5,000,000 and 5,400,000

5,000,000 and 5,100,000

Calliope Torres Co. had 200,000 shares of common stock, 20,000 shares of
convertible preferred stock, and $1,500,000 of 10% convertible bonds
outstanding during 2013. The preferred stock is convertible into 40,000 shares
of common stock. During 2013, Lerner paid dividends of $1.35 per share on the
common stock and $4.50 per share on the preferred stock. Each $1,000 bond is
convertible into 45 shares of common stock. The net income for 2013 was
$900,000.