Quiz Ch14 Acct 103

When a component of an entity is disposed of, the disposal is reported separately on the income statement in the “discontinued operations” section, ignoring the income tax effect.

• True

• False

Stock dividends reduce retained earnings and shareholders’ equity in total.

• True

• False

Stock splits have no effect on the shareholders’ equity accounts.

• True

• False

When calculating earnings per share, the current year’s dividend declared on preferred shares is subtracted from profit.

• True

• False

When a company reacquires shares and the shares are not retired or cancelled, they are referred to as treasury shares.

• True

• False

The alternative payout ratio is calculated by dividing cash dividends per share by earnings per share.

• True

• False

Prior-year financial statements that are published with the current statements are not adjusted for changes in accounting policies.

• True

• False

The statement of changes in shareholders’ equity focuses only on the changes in the retained earnings equity during the year.

• True

• False

All corporations, public and private, need to prepare a statement of comprehensive income.

• True

• False

The price-earnings ratio is calculated by dividing the market price per share by the earnings per share.

• True

• False