ACCT 2301 ch. 11 review
A corporate charter specifies that the company may sell up to 20 million shares of stock. The company issues 12 million shares to investors and later repurchases 3 million shares. The number of issued shares after these transactions have been accounted for is: A) 12 million shares. B) 11 million shares. C) 9 million shares. D) 5 million shares
A) 12 million shares.
A company has 110,000 shares authorized, 50,000 shares issued, and 5,000 shares of treasury stock. How many shares are outstanding? A) 45,000 B) 155,000 C) 55,000 D) 145,000
A) 45,000 Shares outstanding = Shares issued - Treasury shares = 50,000 - 5,000 = 45,000
A corporate charter specifies that the company may sell up to 20 million shares of stock. The company sells 12 million shares to investors and later buys back 3 million shares. The number of authorized shares after these transactions are accounted for is: A) 12 million shares. B) 20 million shares. C) 9 million shares. D) 17 million shares.
B) 20 million shares.
For a business to be considered a corporation: A) its stock must be sold in very large amounts. B) it must be organized as a separate legal entity. C) it must issue both common and preferred stock. D) it must pay dividends.
B) it must be organized as a separate legal entity.
Features of common stock usually include all of the following except: A) voting rights. B) dividends. C) primary claim to the company's assets in case of liquidation. D) preemptive rights.
C) primary claim to the company's assets in case of liquidation.
A corporate charter specifies that the company may sell up to 20 million shares of stock. The company sells 12 million shares to investors and later buys back 3 million shares. The current number of outstanding shares after these transactions have been accounted for is: A) 8 million shares. B) 20 million shares. C) 10 million shares. D) 9 million shares.
D) 9 million shares.
Which of the following statements about a corporation is not correct? A) A corporation is a separate legal entity. B) A corporation has easy transferability of ownership. C) A corporation may have the ability to raise large amounts of capital. D) A corporation's owners have unlimited liability.
D) A corporation's owners have unlimited liability.
The stockholders' equity section of the balance sheet includes all of the following except: A) Retained Earnings. B) Contributed Capital. C) Treasury Stock. D) Dividends.
D) Dividends.
Which of the following statements about the benefits enjoyed by the owners of common stock is not correct? A) Some classes of common stock can carry more votes than others. B) Investors in a corporation are called stockholders. C) Stockholders receive a share of the corporation's profits when distributed as dividends. D) If the company ceases operations, stockholders share in any assets remaining before creditors have been paid.
D) If the company ceases operations, stockholders share in any assets remaining before creditors have been paid.
All of the following are a part of contributed capital except: A) Common Stock. B) Additional Paid-in Capital. C) Preferred Stock. D) Retained Earnings.
D) Retained Earnings.
A company that pays no dividends is always a poor investment.
false
Corporations are governed by federal law.
false
The par value of stock indicates what the stock is worth.
false
Treasury stock is a corporation's own stock that has been issued and subsequently repurchased by the corporation.
false
When a company reissues (or sells) shares of its treasury stock at an amount different than its cost, it reports a gain or a loss on the sale.
false
A corporation does not have a legal obligation to pay dividends.
true
Issuing stock to obtain financing is called equity financing.
true
Preferred stock is generally classified as stockholders' equity under both GAAP and IFRS.
true
The price-earnings ratio reveals information about the stock market's expectations for a company's future growth in earnings.
true
Unpaid dividends on cumulative preferred stock are called dividends in arrears.
true