Intermediate Accounting II Bus 203 Stockholders' Equity & Earnings Per Share REVIEW Which of the following transactions does not result in a decrease to retained earnings? a. Declaration of a cash dividend b. Payment of a cash dividend c. Incurrence of a net loss for the period d. A prior period adjustment (correction of an error) in which revenue was overstated 2. How should a loss from the sale of Treasury Stock be reflected in the accounts when using the Cost Method of recording Treasury Stock transactions? a. As a decrease to common stock b. As a prior period adjustment c. A reduction to additional paid-in capital or charge to Retained Earnings d. As a loss on the Income Statement 3. Retained Earnings can best be described as: a. A claim to specific assets that have been contributed by the owners b. The maximum amount that can be borrowed by the corporation c. The residual interest that may be claimed by shareholders after all debts have been settled d. The cumulative amount of earnings, less any dividend distributions, retained by the business 4. Which of the following is not considered a dilutive security for purposes of determining earnings per share? a. Treasury Stock b. Convertible Bonds C. Convertible Preferred Stock d. Stock Warrants 5. Stockholders' Equity can best be described as: a. A claim to specific assets that have been contributed by the owners b. The residual interest that may be claimed by shareholders after all debts have been settled C. The maximum amount that can be borrowed by the corporation d. The cumulative earnings, less any dividends or other similar distributions, retained by the business