Corporate Income Statement and Stockholders’ Equity: Quiz Questions – Chapter 15

Summary

Corporate income statements and stockholders’ equity are covered. Students can test their understanding with multiple-choice questions.

What is net income

Net income is discussed. Students must decide what it does not include. Extraordinary gains and losses are included.

Income figures for future performance

Income figures that predict future performance are considered. Students choose the best predictor from a list. Income from continuing operations is the answer.

Extraordinary items on an income statement

Extraordinary items on a corporate income statement are defined. Students identify which of several items should be classified as extraordinary. A loss due to takeover is the answer.

Earnings per share calculations

Earnings per share calculations are explained. Students choose which items are involved. Dividends declared on nonconvertible preferred stock are involved.

Key terms

net income

The profit of a company after all expenses and taxes have been deducted from total revenue.

extraordinary items

Unusual and infrequent gains and losses that are not part of a company's regular operations.

earnings per share

The portion of a company's profit allocated to each outstanding share of common stock.

stockholders’ equity

The residual claim of shareholders on a company's assets after all liabilities have been paid.

retained earnings

The portion of a company's profit that is retained for reinvestment rather than being paid out as dividends.

stock dividend

A dividend paid in the form of additional shares rather than cash.

Questions this document helps with

• What is included in net income?
• How can income figures help predict future performance?
• What is an extraordinary item on a corporate income statement?

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