Day 28 Flashcards
A RE appropriation can be used to:
Restrict earnings available for dividends
Rule: RE appropriation Debits (reduces), it does not affect the IS
MCQ-01574
Under the cost method what are the affects on RE when Treasury stock is sold for more than it’s acquisition price?
No affect
MCQ-00981
Equation: Shareholder’s Equity
Consists of:
- Capital stock
- APIC
- RE
- & Treasury stock & Noncontroling interest may impact
MCQ-14829
How is SH Equity affected when the company owns it’s one stock?
Shares of it’s own stock should be treated as Treasury Stock and reduce Shareholder’s Equity
MCQ-01471
Gains and losses on the purchase and resale of Treasury stock are reflected in:
Paid in Capital and RE
Gains on Treasury stock increase paid in Capital
Losses on Treasury stock decrease paid in Capital to zero, then decrease RE
MCQ-04511
What transaction will increase Shareholder’s Equity?
The sale of Treasury stock at less than cost
The sale of treasury stock at less than cost will result in a net increase in stockholders’ equity.
The original cost of the treasury stock is credited
any additional paid in-capital- treasury stock is debited
and any excess over the additional paid-in-capital would reduce retained earnings
However, the net impact to stockholders equity would still be positive as long as cash is received from the sale of the treasury stock.
MCQ-08737
What are the two methods of accounting for Treasury Stock:
- Cost Method (Gain or Loss IMMEDIATELY calculated upon REISSUE)
- Legal (or Par / State Value) Method (Gain or Loss IMMEDIATELY calculated upon REPURCHASE)
Note: Gains or Losses are recorded as an adjustment to SH Equity NOT included in Net Income
TBS-732900
Treasury Stock - Cost Method
- TS are recorded and carried at their REACQUISITION COST
- Gain or Loss is determined at REISSUED PRICE
- “APIC from Treasury Stock” is CREDITED for Gains
- “APIC from Treasury Stock” is Debited for Losses and may also decrease Retained Earnings
TBS-732900
Equation: Basic EPS
= Income Available to Common SH’s / Weighted Average # of Common Shares Outstanding
MCQ-01198
When would Stock Options be “Anti-diluted”?
When the Exercise Price exceeds the Market Price
MCQ-05675
Define: WACSO
Weighted
Average Number of
Common
Shares
Outstanding
MCQ-01200
Equation: Diluted EPS
WACSO
= Diluted EPS
MCQ-05675
When computing the WACSO for Basic EPS, convertible securities are:
ignored
MCQ-01201
True or False: Under US GAAP, EPS data for discontinued operations should not be reported?
False
Discontinued operations EPS should be reported on the IS or in the notes of the FS
MCQ-00222
What must occur to EPS when a stock splits?
The shares outstanding before the stock split MUST be restated
Must be retroactively adjusted for prior periods
MCQ-01209
