Below Is the Common Equity Section (In Millions)of Fethe Industries

question 25

Multiple Choice

Below is the common equity section (in millions) of Fethe Industries' last two year-end balance sheets:

The company has never paid a dividend to its common stockholders.Which of the following statements is CORRECT?

• A) The company's net income in 2011 was higher than in 2012.
• B) The company issued common stock in 2012.
• C) The market price of the company's stock doubled in 2012.
• D) The company had positive net income in both 2011 and 2012, but the company's net income in 2009 was lower than it was in 2011.
• E) The company has more equity than debt on its balance sheet.

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Definitions:

First-stage Allocation

The process in managerial accounting where overhead costs are allocated to various departments or cost centers as a preliminary step.

Special Cost Pool

A financial management term for aggregating specific costs together, typically for reporting or reimbursement purposes.

ABC System

An approach in accounting that allocates overhead and indirect costs to specific activities related to the production of a product or service.

Allocating Costs

The process of assigning indirect expenses to different departments, products, or projects based on relevant criteria.