1) Financial statement data for the year ending December 31 for Langford Company are shown below.

Net income $450,000

Preferred dividends $50,000

Average number of common shares outstanding 80,000 shares

What is earnings per share for the year?

a.$6.25

b.$5.00

c.$5.63

d.None of these choices are correct.

2) Earnings per common share is calculated as

a.Net Income/Average Number of Common Shares Outstanding.

b.Retained Earnings/Average Number of Common Shares Outstanding.

c.Net Income/Retained Earnings.

d.(Net Income - Preferred Dividends)/Average Number of Common Shares Outstanding.

3) Wave Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $5,000 on equipment. The company earned net income of $15,000 and declared cash dividends of $5,000. Compute the year-end retained earnings balance.

a.$40,000

b.$30,000

c.$25,000

d.$35,000

4) An advantage of the corporate form of business entity is

a.the ease of transfer of ownership.

b.double taxation.

c.corporations are subject to more governmental regulations.

d.unlimited liability for stockholders.

5) Which of the following increases retained earnings?

a.Net loss

b.Net income

c.Dividends

d.None of these choices are correct.

6) The interest portion of an installment note payment is computed by

a.dividing the carrying amount (book value) of the note at the end of the period by the interest rate.

b.multiplying the interest rate by the carrying amount (book value) of the note at the end of the period.

c.dividing the carrying amount (book value) of the note at the beginning of the period by the interest rate.

d.multiplying the interest rate by the carrying amount (book value) of the note at the beginning of the period.

7) An annuity refers to a

a.principal payment.

b.series of equal cash receipts at fixed intervals.

c.balloon payment.

d.lump sum payment.

8) The balance in Unamortized Premium on Bonds Payable should be

a.reported in the Paid-In Capital section of the balance sheet.

b.reported separately in the Current Liabilities section of the balance sheet.

c.added to the face amount of the related bonds payable on the balance sheet.

d.reported on the balance sheet as a deduction from the face amount of the related bonds payable.