Question 1 Earnings available to common stockholders is equal to: · Net income + Preferred stock dividends · Preferred stock dividends – Net income · Net income – Pr

Question 1

Earnings available to common stockholders is equal to:

·         Net income + Preferred stock dividends

·         Preferred stock dividends – Net income

·         Net income – Preferred stock dividends

·         Total revenues

Question 2

If total liabilities decreased by $45,000 and stockholders' equity decreased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period?

·         $60,000 increase

·         $30,000 decrease

·         $60,000 decrease

·         $30,000 increase

Question 3

Common stock is reported on the

·         statement of cash flows.

·         retained earnings statement.

·         income statement.

·         balance sheet.

Question 4

A business organized as a separate legal entity is a

·         corporation.

·         proprietor.

·         government unit.

·         partnership.

Question 5

The statement of cash flows begins with cash flows from

·         financing activities.

·         investing activities.

·         operating activities.

·         solvent activities

Question 6

Expenses are incurred

·         only on rare occasions.

·         to produce assets.

·         to produce liabilities.

·         to generate revenues.

Question 7

Using the following balance sheet and income statement data, what is the current ratio?

Current assets 14,000

Net income 24,000

Current liabilities 8,000

Stockholders' equity 42,000

Average assets 80,000

Total liabilities 18,000

Total assets 60,000

Average common shares outstanding was 10,000

1.75 : 1

1.6 : 1

0.57 : 1

3.3 : 1

Current Assets / Current liabilities =  $14000/$8000 = 1.75

Question 8

Which organization issues U.S. accounting standards?

·         Security Exchange Commission.

·         International Accounting Standards Committee.

·         International Auditing Standards Committee.

·         Financial Accounting Standards Board.

Question 9

Using the following balance sheet and income statement data, what is the earnings per share?

Current assets              9,000

Net income                  12, 000

Current liabilities         4,000

Stockholders' equity   24,000

Average assets            44,000

Total liabilities             6,000

Total assets                  30,000

Average common shares outstanding was 10,000

·         $1.20

·         $2.00

·         $0.83

·         $0.44

Net income / Average shares outstanding

12000 / 10000

Question 10

Which of the following clarifies information presented in the financial statements, as well as expanding upon it where additional detail is needed?

Auditor's report

·         Management discussion and analysis section

·         Notes to the financial statements

·         President's state of the company report