II._____T or F Market value per share differs from book value per share. Market
ID: 2530223 • Letter: I
Question
II._____T or F Market value per share differs from book value per share. Market value fluctuates based on investors' perception of a firm's future potential. Book value is based on the balance sheet. (if false, identify and correct the error)
_____4. Evie Corp, has the following Stockholders’ Equity account balances and activity for Year 2.
Net income
$8,500,000
Retained earnings
$5,955,000
Preferred stock shares outstanding
1,000
Common stock shares outstanding at January 1, Yr 2
3,750,000
Additional Common shares issued at July 1, Yr 2
10,000
2-for-1 stock split at December 31, Yr 2
Preferred Dividends
$15,000
Common Dividends
$75,000
Year 1 EPS
$2.20
Earnings per share = __________________ / ___________________* = ________
* Compute Denominator: Weighted average common shares outstanding
Date
Shares
Portion of year
Weighted Average Shares
January 1, Y2
3,750,000
July 1, Y2
Weighted Average December 31 before split
Stock split 2-for-1
*Total Weighted Average, 12/31/Y2
Note: Year 1 restated
$2.20 / 2 =_____
______5. a. _____ T or F Stock options are recorded as paid-in-capital over the period during which the employee provides associated service to vest in the options. (if false, identify and correct the errors)
b. _____ T or F Stock appreciation rights give the employee compensation at a future date, based on the market price at the date of exercise in excess of a pre-established price. (if false, identify and correct the errors)
Accy 306 Quiz #9, page 3 of 3
Module 10—Statement of Cash Flows
______6. a._____ T or F Certificates of deposit, commercial paper and U.S. Treasury Bills with original maturity of 6 months or less are examples of highly liquid investments and are classified as cash equivalents. (if false, identify and correct error)
b. _____ T or F Depreciation expense reduces operating income but does not require the use of cash. In the Statement of Cash Flows it is separately stated as an addition to net income. (if false, identify and correct error)
_____7. Bons Fish Company had cash sales of $55,000, increase in accounts payable of $18,000, decrease in accounts receivable of $5,000, increase in inventories of $8,000, and depreciation expense of $2,000. What was the cash collected from customers?
a.
$55,000
b.
$50,000
c.
$60,000
d.
$42,000
e.
$58,000
8. Place an X in the appropriate columns for each of the following situations.
Non-
Cash Flows Classification
Effect on
cash
Operating
Investing
Financing
Cash
Trans-
Transaction
Activity
Activity
Activity
+
-
action
a.
Sale of land for cash
__
__
__
__
__
__
b.
Issuance of bonds for cash
__
__
__
__
__
__
c.
Paying off accounts payable
__
__
__
__
__
__
d.
Acquired land using common stock
__
__
__
__
__
__
e
Paid $10,000 cash dividend
__
__
__
__
__
__
f.
Collected $1,000 accounts receivable
__
__
__
__
__
__
g.
Purchased building using cash
__
__
__
__
__
__
h.
Net Income
__
__
__
__
__
__
i.
Sales of inventory on account
__
__
__
__
__
__
j.
Issue common stock to retire bonds
__
__
__
__
__
__
Net income
$8,500,000
Retained earnings
$5,955,000
Preferred stock shares outstanding
1,000
Common stock shares outstanding at January 1, Yr 2
3,750,000
Additional Common shares issued at July 1, Yr 2
10,000
2-for-1 stock split at December 31, Yr 2
Preferred Dividends
$15,000
Common Dividends
$75,000
Year 1 EPS
$2.20
Explanation / Answer
Dear student, only one question is allowed at a time. I am answering the first question
Market value of a share is the amount a shareholder is willing to pay for a share due to their perception regarding future earning potential or the organization
Book value of a share is the book value of the share calculated as per figures appearing in the balance sheet and is based on Net worth of the organization
Market value and book value of a share will always differ and so the above statement is True