1. Restrictions of retained earnings may be classified as

a. legal.

b. contractual.

c. discretionary.

d. All of these choices are correct.

2. A corporation has a $500,000 beginning balance in Retained Earnings. Its net income for the year was $200,000. Sales revenue amounted to $1,000,000, and dividends declared and paid by year-end amounted to $100,000. What was the ending balance in Retained Earnings?

a. $600,000

b. $1,400,000

c. $700,000

d. $1,200,000

3. On the balance sheet, the balance of Treasury Stock is

a. added to stockholders' equity.

b. deducted from stockholders' equity.

c. disclosed only in the notes.

d. not reported.

4. EPS is calculated as

a. net income divided by the number of shares outstanding.

b. revenue divided by number of shares issued and outstanding.

c. net income less preferred dividends divided by average number of common shares outstanding during the period.

d. None of these choices are correct.

5. An increase in EPS from one year to the next would indicate

a. an unfavorable trend.

b. a favorable trend.

c. a neutral trend.

d. None of these choices are correct.

6. Windborn Company has 25,000 shares of cumulative preferred 3% stock, $150 par and 50,000 shares of $10 par common stock. The following amounts were distributed as dividends:

Year 1	$168,800
Year 2	45,000
Year 3	337,500

Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.

	Year 1	Year 2	Year 3
Preferred stock (Dividends per share)	$	$	$
Common stock (Dividends per share)	$	$	$

7. Zero Calories Company has 16,000 shares of cumulative preferred 1% stock, $40 par and 80,000 shares of $150 par common stock. The following amounts were distributed as dividends:

Year 1	$21,600
Year 2	4,000
Year 3	100,800

Determine the dividends per share for preferred and common stock for each year. If an answer is zero, enter '0'. Round all answers to two decimal places.

	Year 1	Year 2	Year 3
Preferred stock (Dividends per share)	$	$	$
Common stock (Dividends per share)	$	$	$