226.Prior period adjustments are reported
a.in the footnotes of the current year's financial statements.
b.on the current year's statement of financial position.
c.on the current year's income statement.
d.on the current year's retained earnings statement.
227.Retained earnings are occasionally restricted
a.to set aside cash for dividends.
b.to keep the legal capital associated with share premium intact.
c.due to contractual loan restrictions.
d.if preference dividends are in arrears.
228.Retained earnings is increased by each of the following
except
a.net income.
b.prior period adjustments.
c.some disposals of treasury shares.
d.All of these answer choices are correct.
229.A prior period adjustment for understatement of net income will
a.be credited to the Retained Earnings account.
b.be debited to the Retained Earnings account.
c.show as a gain on the current year's income statement.
d.show as an asset on the current year's Statement of Financial Position.
230.The retained earnings statement
a.is the equity statement for a corporation.
b.will show an addition to the beginning retained earnings balance for an understatement of net income in a prior year.
c.will not reflect net losses.
d.will, in some cases, fail to reconcile the beginning and ending retained earnings balances.
231.The return on ordinary shareholders' equity is computed by dividing net income available to ordinary shareholders by
a.ending total shareholders' equity.
b.ending ordinary shareholders' equity.
c.average total shareholders' equity.
d.average ordinary shareholders' equity.
232.The return on ordinary shareholders’ equity is computed by dividing average ordinary shareholders’ equity into
a.net income.
b.net income less ordinary and preference dividends.
c.net income less ordinary dividends.
d.net income less preference dividends.
233.Lang Inc. reported net income of €235,000 during 2014 and paid dividends of €26,000 on ordinary shares. It also has 10,000 shares of 6%, €100 par value preference share outstanding. Ordinary shareholders' equity was €1,200,000 on January 1, 2014, and €1,600,000 on December 31, 2014. The company's return on ordinary shareholders' equity for 2014 is:
a.14.9%
b.12.5%
c.10.6%
d.16.8%
234.Harris Corporation had net income of $180,000 and paid dividends of $50,000 to ordinary shareholders and $20,000 to preference shareholders in 2014. Harris Corporation’s ordinary shareholders’ equity at the beginning and end of 2014 was $870,000 and $1,130,000, respectively. There are 100,000 weighted-average ordinary shares outstanding.
Harris Corporation’s return on ordinary shareholders’ equity was
a.18%.
b.16%.
c.13%.
d.11%.
235.Assume that all statement of financial position amounts for Remington Company represent average balance figures.
Shareholders’ equity—ordinary $150,000
Total equity200,000
Sales revenue100,000
Net income31,000
Number of ordinary shares 10,000
Ordinary share dividends10,000
Preference share dividends4,000
What is the return on ordinary shareholders’ equity ratio for Remington?
a.20.7%
b.18.0%
c.14.0%
d.11.3%