Question Details

The date a cash dividend becomes a binding legal 



1.	Each of the following statements is correct except that earnings per share is reported
a.	below net income.
b.	for both common and preferred stock.
c.	on the face of the income statement.
d.	based on the weighted-average number of common shares outstanding.

	2.	Blanco, Inc. has a net income of $300,000 for 2014, and there are 200,000 weighted-average shares of common stock outstanding. Dividends declared and paid during the year amounted to $40,000 on the preferred stock and $60,000 on the common stock. The earnings per share for 2014 is
a.	$2.50.
b.	$1.20.
c.	$1.30.
d.	$1.00.

	3.	The formula for computing earnings per share is net income
a.	divided by the ending common shares outstanding.
b.	divided by the weighted-average number of common shares outstanding.
c.	less preferred dividends divided by the ending common shares outstanding.
d.	less preferred dividends divided by the weighted-average number of common shares outstanding.

4.	Which of the following statements about a cash dividend is incorrect?
a.	The legality of a cash dividend depends on state corporation laws.
b.	The legality of a dividend does not indicate a company's ability to pay a dividend.
c.	Dividends are not a liability until declared.
d.	Shareholders usually vote to determine the amount of income to be distributed in the form of a dividend.

	5.	The date a cash dividend becomes a binding legal obligation to a corporation is the
a.	declaration date.
b.	earnings date.
c.	payment date.
d.	record date.




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