(CMA Adapted, Jun 96 #18) the Book Value Per Share

question 193

Multiple Choice

(CMA adapted, Jun 96 #18) The book value per share calculation of a corporation is usually significantly different from the market value of the stock's selling price due to the

• A)use of accrual accounting in preparing financial statements.
• B)use of the matching principle in preparing financial statements.
• C)omission of the number of preferred shares outstanding at year end in the calculation.
• D)use of historical costs in preparing financial statements.
• E)none of the above.

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Definitions:

Stockholders

Individuals or entities that own shares in a corporation, giving them certain rights and responsibilities.

Fees Earned

Income earned by a company from its service offerings over a defined time frame.

Journal Entry

A record in accounting that notes the debit and credit movements across accounts for a particular financial transaction.

Account

A record in bookkeeping that tracks the financial transactions of a specific asset, liability, equity, revenue, or expense.