Acct 11 - Chapter 14

Question 1

ACCUMULATED OTHER COMPREHENSIVE INCOME

Answer 1

The cumulative amount of other comprehensive income and losses over the life of the company reported as a separate amount in shareholders’ equity.

Question 2

BASIC EARNINGS PER SHARE

Answer 2

The profit (or loss) earned by each common share. It is calculated by subtracting any preferred dividends declared from profit and dividing the result by the weighted average number of common shares.

Question 3

COMPONENT OF AN ENTITY

Answer 3

A separate major line of business or geographic area of operations.

Question 4

COMPREHENSIVE INCOME

Answer 4

All changes in shareholders’ equity during a period except for changes resulting from the sale or repurchase of shares, or from the payment of dividends.

Question 5

CONTINUING OPERATIONS

Answer 5

The revenues, expenses, and profit or loss generated from a company’s ongoing activities.

Question 6

DISCONTINUED OPERATIONS

Answer 6

A component of an enterprise that has been disposed of or classified as “held for sale.”

Question 7

DISTRIBUTION DATE

Answer 7

The date when stock dividends are distributed to shareholders.

Question 8

EARNINGS PER SHARE (EPS)

Answer 8

The profit (or loss) earned by each common share.

Question 9

FULLY DILUTED EARNINGS PER SHARE

Answer 9

Earnings per share are adjusted for the maximum possible dilution that would occur if securities were converted, or changed, into common shares.

Question 10

INTRAPERIOD TAX ALLOCATION

Answer 10

The procedure of associating income tax expense with the specific item that directly affects the income tax for the period.

Question 11

OTHER COMPREHENSIVE INCOME (LOSS)

Answer 11

Gains and losses that are not included in profit but affect shareholders’ equity.

Question 12

PAYOUT RATIO

Answer 12

A ratio that measures the percentage of income distributed as cash dividends. It is calculated by dividing cash dividends by profit.

Question 13

PRICE-EARNINGS (PE) RATIO

Answer 13

The ratio of the price of a common share to earnings per common share.

Question 14

PRIOR PERIOD ERROR

Answer 14

A material error made in a revenue or expense account in a prior year that misstated that year’s profit.

Question 15

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Answer 15

A statement that reports all increases and decreases to shareholders equity during a period.

Question 16

STOCK DIVIDEND

Answer 16

A pro rate distribution of the corporation’s own shares to shareholders.

Question 17

TREASURY SHARES

Answer 17

A corporation’s own shares that have been reacquired and not yet retired or cancelled. They are held in “treasury” for later reissue or cancellation.

Question 18

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

Answer 18

The number of common shares issued during the year, with any shares purchased or issued during the year weighted by the fraction of the year that they have been outstanding.