Question

1)ABC Industries is considering a stock dividend versus a 2-for-1 stock split. Which of the following are true in regards to each of these offerings

Multiple Choice

• The stock dividend and the stock split would be result in proportional changes in ownership for the current stockholders.

• Neither the stock dividend nor the stock split would be result in proportional changes in ownership for the current stockholders.

• The stock dividend would be result in proportional changes in ownership for the current stockholders, but the stock split would not.

• The stock split would result in proportional changes in ownership for the current stockholders, but the stock dividend would not.

2) ABC has convertible instruments on its Balance sheet. Distinguish between basic and diluted Earnings per Share (EPS) to be reported.

Multiple Choice

• Basic EPS and Diluted EPS both include the effects of convertible instruments “as if” converted.

• Neither Basic EPS, nor Diluted EPS, include the effects of convertible instruments “as if” converted.

• Basic EPS includes the effects of convertible instruments “as if” converted, but Diluted EPS does not.

• Diluted EPS includes the effects of convertible instruments “as if” converted, but Basic EPS does not.

3) On the ABC’s Statement of Cash Flows, in what section would the following items appear?

                Increase in Accounts payable

                Increase in Non-trade Notes Payable

Multiple Choice

• Operating for both the Accounts Payable and the Non-trade Notes payable.

• Financing for both the Accounts Payable and the Non-trade Notes payable.

• Operating for the Accounts Payable and Financing for the Non-trade Notes payable.

• Financing for the Accounts Payable and Operating for the Non-trade Notes payable.

Answer 1

Q1.
Answer is Neither stock dividend nor stock splitt woule result in proportional change in ownership of current stakeholders.
Explanation:
Both the stock dividend and stock splitt are additional stocks given existing to existing stockholders in proportion to their holdings.
Thus, these does not result in change in proportional ownership of holdings.
Q2.
Answwer is Diluted EPS includes the effects of convertible instruments as if converted but Basic EPS does not.
Q3.
Answer is Operating for the Accounts payable and Financing for non-Trade notes payable