A-AS Level (CIE) Accounting Paper-3: Specimen Questions with Answers 38 - 39 of 50

Question 38

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Question

MCQ▾

ABC ltd has $1 million net income in its third quarter. ABC ltd announces its dividend of $2,50,000 at total outstanding shares at 11,000,000.

What will be the EPS?

Choices

Choice (4)
a.$4.58
b.$1.58
c.$0.068
d.$0.58

Answer

c.

Explanation

EPS= (net income- preferred dividends) / End of period shares outstanding

The EPS of ABC ltd would be:

Since every share has equal amount of share of net income, they would get $0.068.

Question 39

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Question

MCQ▾

Trial balance checks

Choices

Choice (4)
a.Valuation of liabilities
b.Valuation of stock assets
c.Arithmetical accuracy of books of accounts.
d.Valuation of closing stock

Answer

c.

Explanation

  • All the businessmen after completion of postings from Journal or Subsidiary Books to the Ledger, want to verify accuracy of the posting. For this purpose, a statement is prepared wherein the balances of all the accounts in the Ledger are incorporated. The statement so prepared is called Trial Balance’. Accounts showing debit balances are put on the debit side of the trial balance and the accounts showing credit balances are put on its credit side. If the total of the debit side is equal to that of its credit side, it is presumed that the posting to the ledger is accurate.
  • The reason for agreement of a trial balance is that under the double entry system, each transaction is recorded two times, once on the debit side of an account and again on the credit side of another account. Thus, the total of all the entries on the debit side of all the accounts must be equal to the total of all the entries on the credit side of all the accounts. If the totals of both the sides of a trial balance are equal, it is proved that the books are at least arithmetically correct.

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