chapter 8 learnsmart

Which of the following statements are true? Multiple select question.

- Many states allow corporations to issue no-par stock. - To minimize the amount of assets that owners must maintain in the business,many corporations issue stock with very low par values.

Cloud Company has 5,000 shares of 6%, $20 par value cumulative preferred stock outstanding. The company also has 8,000 shares of $10 par value common stock outstanding. Cloud paid $30,000 of cash dividends in a year when no dividends were in arrears. Based on this information, the preferred stockholders received $

Blank 1: 6,000 Blank 2: 24,000

Corporations normally list accountBlank 1Blank 1 account , Incorrect Unavailable stock before parBlank 2Blank 2 par , Incorrect Unavailable stock in the stockholders' section of the balance sheet.

Blank 1: preferred Blank 2: common

When board members are reluctant to fire the CEO or other poorly performing managers, a corporation is said to be experiencing

entrenched

Base Line Incorporated is authorized to issue 50,000 shares of $15 par value common stock. On January 1, Year 1, Base Line issued 10,000 shares of the stock for $24 per share. As a result of the stock issue, ______.

the income statement was not affected total assets increased by $240,000 cash flow from financing activities increased by $240,000

Which of the following is not normally included in the articles of incorporation? Multiple choice question.

A forecast of projected profitability

A partnership balance sheet includes ______

a separate capital account for each partner

The date of record for a cash dividend ______. Multiple choice question.

has no effect on the financial statements

The term withdrawal may appear in the financial statements of a ______.

proprietorship partnership

Which of the following statements are true?

- If a company skips a dividend on noncumulative preferred stock, the dividend is lost forever. - Preferred stock dividends in arrears must be paid before dividends can be distributed to common stockholders.

Base Line Incorporated is authorized to issue 50,000 shares of $15 par value common stock. On January 1, Year 1, Base Line issued 10,000 shares of the stock for $24 per share. Immediately after the issue, Base Line's balance sheet will show ______ of paid-in-capital in excess of par value. Multiple choice question.

90,000

The Sarbanes-Oxley Act gave the ______ authority to set and enforce standards for auditors of public companies. Multiple choice question.

PCAOB

The party that owns the stock on the date of ______ is legally entitled to a cash dividend. Multiple choice question.

RECORD

How do stockholders benefit from investing in capital stock?

The market value of the investment may increase. Stockholders may receive dividends.

Which of the following statements are true?

The stock of closely held companies is not sold on major stock exchanges. Trading on a stock exchange is limited to the stockbrokers who are members of the exchange

At the time treasury stock is purchased, total assets ______. Multiple choice question.

and total stockholders' equity both decrease

Which form of business organization offers the greatest opportunity to raise capital? Multiple choice question.

capiats

Corporations become legally obligated to pay dividends on the ______. Multiple choice question.

declaration date

Paying a previously declared cash dividend ______. Multiple choice question.

decreases both liabilities and assets

Declaring a cash dividend ______. Multiple choice question.

increases liabilities and decreases stockholders' equity

Stanley Company paid $25 per share to purchase 200 shares of its $10 par value common stock. If Stanley resells 100 shares of the treasury stock for $30 per share, Stanley will _______

report the $3,000 as a financing activity recognize a $500 increase in additional paid-in capital from treasury stock

The market value of stock should increase when a company ______. Multiple choice question.

retains earnings for reinvestment

Which of the following statements are true?

- The number of shares outstanding may be less than the number of shares issued. - Treasury stock is stock that a company has repurchased from its investors.

Corporations purchase treasury stock to ______. Multiple select question.

- keep the price of the stock high when it appears to be falling - have stock available to satisfy the requirements of employee stock option plans - avoid a hostile takeover

Stock prices are influenced by ______.

financial and nonfinancial information consumer confidence general economic conditions

Which of the following statements are true? Multiple select question.

Limited liability companies (LLCs) offer many of the benefits of corporate ownership, yet are, in general, taxed as partnerships. S Corporations are taxed as proprietorships or partnerships.

Book value per share is ______. Multiple select question.

calculated by dividing total stockholders' equity by the number of shares of stock owned by investors measured in historical dollars

When a company issues no-par common stock, the ______.

cash inflow is classified as a financing activity entire amount of the proceeds is placed into the Common Stock account.

Stock certificates are used as evidence of ownership in ______.

corporation

Preferred stock ______.

dividends are paid before dividends are distributed to common stockholders has a liquidation value that, in case of bankruptcy, is paid before assets are distributed to common stockholders

When a corporation buys treasury stock, the ______. Multiple select question.

number of shares of stock authorized is not affected number of shares of stock outstanding decreases

In predicting the declaration of cash dividend payments a stockholder can examine ______. Multiple select question.

the cash account to assess sufficiency for dividend declarations retained earnings to assess sufficiency for dividend declarations

If a company reissues its Treasury Stock, its ______ increase(s).

total assets stockholders' equity

Cloud Company has 5,000 shares of 6%, $20 par value cumulative preferred stock outstanding. The company also has 8,000 shares of $10 par value common stock outstanding. Cloud paid no dividends in Year 1 or Year 2. In Year 3, Cloud paid $30,000 of cash dividends. What was the amount of dividends paid to common stockholders?

12,000

Cloud Company has 5,000 shares of 6%, $20 par value noncumulative preferred stock outstanding. The company also has 8,000 shares of $10 par value common stock outstanding. Cloud paid no dividends in Year 1 or Year 2. In Year 3, Cloud paid $30,000 of cash dividends. What was the amount of dividends paid to preferred stockholders? Multiple choice question.

6,000

Which of the following statements are true?

A proprietorship is the simplest form of business organization to organize and operate. The requirements for establishing a corporation vary from state to state.

Base Line Incorporated is authorized to issue 50,000 shares of $15 par value common stock. On January 1, Year 1, Base Line issued 10,000 shares of the stock for $24 per share. As a result of the stock issue, ______.

total assets increased by $240,000 the income statement was not affected