Accounting Quiz - Online -
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1. The retained earnings statement
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is the owners' equity statement for a corporation.1
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will show an addition to the beginning retained earnings balance for an understatement of net income in a prior year.2
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will not reflect net losses.1
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will, in some cases, fail to reconcile the beginning and ending retained earnings balances.2
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2. Corporation income tax expense is
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usually accrued in the adjusting entry process.4
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not reported in a separate section of a corporate income statement.0
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reported similarly for corporations and partnerships.1
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not usually accrued because it is not known what the exact liability will be until the tax return is filed.1
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3. When computing earnings per share,
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an adjustment for the preferred dividends is made in the denominator of the earnings per share formula.2
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the dividends for cumulative preferred stock are deducted from net income only if the preferred dividends have been declared.1
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the dividends for cumulative preferred stock are deducted from net income whether or not preferred dividends have been declared.2
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an adjustment related to preferred stock dividends is made in the numerator and denominator of the earnings per share formula.1
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4. Which of the following statements about retained earnings restrictions is incorrect?
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The board of directors of a corporation may voluntarily create retained earnings restrictions for specific purposes.2
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Long-term debt contracts may impose a restriction on retained earnings as a condition for the loan.1
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Retained earnings restrictions are generally disclosed through a journal entry on the books of a company.3
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Many states require a corporation to restrict retained earnings for the cost of treasury stock purchased.0
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5. The return on common stockholders' equity is computed by dividing
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net income minus preferred dividends by ending common stockholders' equity.1
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net income by average common stockholders' equity.0
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net income minus preferred dividends by average common stockholders' equity.5
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net income by ending common stockholders' equity.0
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