61. Diluted earnings per share is a hypothetical computation to warn stockholders what could happen if:
A. Loss contingencies turn out adversely.
B. Convertible securities are converted into shares of common stock.
C. Extraordinary losses were to recur.
D. Consideration was given to the loss from operations discontinued during the current period.
62. To receive the next cash dividend, an investor must purchase the stock before the:
A. Dividend declaration date.
B. Ex-dividend date.
C. Date of record.
D. Payment date announced by the board of directors.
63. Dividends become a liability of a corporation:
A. On the date the board of directors declares the dividend.
B. On the date of record.
C. On the date payment is to be made.
D. When cumulative preferred stock dividends are in arrears.
64. When a company reports both diluted earnings per share and basic earnings per share:
A. Basic EPS would be greater than fully diluted EPS.
B. Basic EPS would be less than fully diluted EPS.
C. Basic EPS may be either greater or less than fully diluted EPS.
D. Both should never be shown - only one would be reported.
65. A liquidating dividend:
A. Occurs when a corporation distributes shares of its own stock as a dividend, rather than cash.
B. Occurs whenever a corporation distributes non-cash assets as a dividend to its stockholders.
C. Represents a distribution of a corporation's profits to the stockholders.
D. Represents a return of invested capital to a corporation's owners, the stockholders.
66. Dividends are first recorded and retained earnings are reduced on:
A. The ex-dividend date.
B. The date of record.
C. The date of declaration.
D. The date of payment.
67. As a result of a 5% stock dividend:
A. Total stockholders' equity decreases by 5%.
B. The par value per share decreases by 5%.
C. The number of shares owned by each stockholder increases by 5%, but total stockholders' equity does not change.
D. Both the number of shares outstanding and the total stockholders' equity increase by 5%.
68. If a company presents both the basic and diluted earnings per share, the price/earnings ratio is based on:
A. The basic figure.
B. The diluted figure.
C. The average of the basic and diluted figures.
D. A combination of the basic and diluted figures.
69. A large stock dividend and a stock split are similar in that they both cause a:
A. Reduction in total stockholders' equity.
B. Reduction in retained earnings.
C. Reduction in the par value per share.
D. Reduction in the market price per share.
70. Supervox Corporation declared a 3-for-2 common stock split, but this transaction was erroneously recorded as a 50% common stock dividend. As a result:
A. Retained earnings is understated.
B. The total dollar amount of stockholders' equity is overstated.
C. The corporate records do not show the correct number of shares of common stock outstanding.
D. The common stock account is understated.