Earnings Per Share

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An Overview of the International External Reporting Environment
The Conceptual Framework of Accounting and Its Relevance to Financial Reporting
Theories of Financial Accounting
An Overview of Accounting for Assets
Depreciation of Property, Plant and Equipment
Revaluations and Impairment Testing of Non-Current Assets
Inventory
Accounting for Intangibles
An Overview of Accounting for Liabilities
Accounting for Leases
Share Capital, Reserves and Share Options Employee Bonus Schemes
Accounting for Financial Instruments
Revenue Recognition Issues
The Statement of Comprehensive Income and Statement of Changes in Equity
Accounting for Income Taxes
The Statement of Cash Flows
Events Occurring After the Reporting Date
Related-Party Disclosures
Earnings Per Share
Further Consolidation Issues I: Accounting for Intragroup Transactions
Further Consolidation Issues II: Accounting for Non-Controlling Interests
Further Consolidation Issues III: Accounting for Indirect Ownership Interest
Accounting for Foreign Currency Transactions
Translating the Financial Statements of Foreign Operations
Accounting for Corporate Social Responsibility

All Questions

Question 1

Free

True/False

In calculating earnings per share,as per IAS 33 Earnings per Share options issued by the entity are assumed exercised at the beginning of the period or,if later,the date of issue of the option.

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True

False

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Question 2

Free

True/False

IAS 33 Earnings per Share requires entities to reflect in the diluted earnings per share all outstanding convertible instruments.

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True

False

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Question 3

Free

True/False

IAS 33 Earnings per Share does not require entities to restate diluted earnings per share of any prior period presented for changes in the assumptions used in earnings per share calculations or for the conversion of potential ordinary shares into ordinary shares.

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True

False

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Question 4

Free

True/False

IAS 33 Earnings per Share does not require an entity to restate diluted earnings per share of any prior period presented in a case of a stock split.

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True

False

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Question 5

Free

True/False

To maximise dilution of basic EPS,dilutive potential ordinary shares with the highest 'earnings per incremental share' are included in the diluted earnings per share calculation before those with a lower 'earnings per incremental share'.

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Question 6

True/False

In ranking dilutive potential ordinary shares,options and warrants are generally included first because they do not affect the numerator of the calculation.

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True

False

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Question 7

True/False

IAS 33 requires disclosure of diluted EPS even when these numbers are equal.

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True

False

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Question 8

True/False

Under IAS 33 an entity is not required to disclose earnings per share where a loss has been made for the period.

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True

False

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Question 9

True/False

In the situation that a parent entity is presenting its own accounts and consolidated accounts in the annual report,IAS 33 requires earnings per share to be presented in accordance with its requirements for both the parent entity accounts and the consolidated financial statements.

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True

False

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Question 10

True/False

The requirement to apply IAS 33's definition of earnings and its definition of the number of shares means that the earnings per share figures for companies can be easily compared as they are not subject to the professional judgment involved in other areas of accounting.

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True

False

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Question 11

True/False

IAS 33 requires entities to disclose earnings per share and diluted earnings per share in the notes to the accounts.

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True

False

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Question 12

True/False

IAS 33 requires an entity to disclose basic earnings per share for discontinued operations on the face of the statement of comprehensive income.

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True

False

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Question 13

True/False

If a bonus or rights issue is made at the prevailing market price of the shares then there is no bonus element in the issue.

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True

False

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Question 14

True/False

The conversion of potential ordinary shares has no flow-on effects.

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True

False

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Question 15

Multiple Choice

Which of the following entities is not in the scope of IAS 33 Earnings per Share?

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partnerships

reporting entities in the process of listing on the London Stock Exchange

entities that voluntarily disclose earnings per share

reporting entities with listed ordinary shares

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Question 16

Multiple Choice

The earnings per share figure is likely to be of interest to shareholders and potential investors because:

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It calculates the relationship between the share price and the earnings of the entity so that it reflects the market's evaluation of the quality of earnings of the entity.

It may be a useful predictor of share price to the extent that earnings are linked to future cash flows and the market reacts to unexpected changes in earnings.

The relationship between dividends and earnings provides a useful prediction of the likely future cash flows to shareholders from their investment in the entity.

It calculates the return on the capital invested by each shareholder for the period and so is a key benchmark for evaluating the success of the entity.

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Question 17

Multiple Choice

The definition of earnings contained in IAS 33:

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is net profit attributable to ordinary shareholders of the parent entity net of preference dividends.

is net profit excluding earnings attributable to minority interests and measured before the costs of servicing equity other than dividends on ordinary shares are deducted.

is net profit excluding earnings attributable to minority outside equity interests.

excludes any cumulative preference dividends not paid in the period and is measured before the costs of servicing equity other than dividends on ordinary shares are deducted.

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Question 18

Multiple Choice

Ordinary shares are defined by IAS 33 as including ownership interests that are:

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fully paid up for the whole of the period.

redeemable in full or in part at the discretion of the management of the entity.

called an ordinary share.

part of an equity instrument that is subordinate to all other classes of equity instruments.

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Question 19

Multiple Choice

For the purpose of calculating earnings per share,the denominator is:

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outstanding ordinary shares at balance date.

weighted-average number of fully paid ordinary shares.

weighted-average number of the sum fully paid ordinary shares and partly paid equivalents.

outstanding ordinary shares at balance date and weighted-average number of fully paid ordinary shares.

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Question 20

Multiple Choice

Which of the following equity instruments would be considered to be ordinary shares for the purposes of IAS 33?

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ordinary shares that receive a dividend at the discretion of the ownership group or its representatives

preference shares that are entitled to a fixed low rate of dividends and an additional dividend when the rate of dividend to other classes of shares exceeds that fixed rate

ordinary shares that have the right to a cumulative fixed rate of dividends

ordinary shares that receive a dividend at the discretion of the ownership group or its representatives and preference shares that are entitled to a fixed low rate of dividends and an additional dividend when the rate of dividend to other classes of shares exceeds that fixed rate

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