Accounting - Ch 11: Smartbook

Stockholders have the right to __________ at stockholders' meetings.

vote

__________ stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.

Authorized

Corporations can be separated into two types. __________ held corporation does not offer its stock for public sale and usually has fewer stockholders. __________ held corporation offers its stock for public sale and can have thousands of stockholders.

Private Public

Rank the following groups in order of authority--with the highest authority at the top. 1. President, vice president and other officers 2. Employees 3. Board of Directors 4. Stockholders

Stockholders Board of Directors President, vice president and other officers Employees

Stockholders do not have the power to bind the corporation to contracts. This is referred to as lack of mutual agency. T/F

True

No-par value stock is stock not assigned a value per share by the corporate charter. Its advantage is that it can be issued ___________ without the possibility of a minimum legal capital. a. at any price b. only to friends and family c. only to preferred stockholders

a. at any price

__________ stock is the number of shares that a corporation's charter allows it to sell. a. authorized b. outstanding c. issued

a. authorized

__________ value stock is stock not assigned a value per share by the corporate charter. Its advantage is that it can be issued at any price without the possibility of a minimum legal capital. a. no-par b. par c. general

a. no-par

Identify the disadvantages of the corporate form of business. (choose all that apply) a. transferable ownership rights b. corporation taxation c. limited liability d. government regulation e. lack of mutual agency

b. corporation taxation d. government regulation

Identify the advantages of the corporate form of business. (check all that apply) a. corporation taxation b. ease of capital accumulation c. continuous life d. government regulation e. limited liability of stockholders

b. ease of capital accumulation c. continuous life e. limited liability of stockholders

The __________ value per share is the price at which a stock is bought and sold. a. equity b. market c. par d. stated

b. market

The __________ value of stock is an amount assigned per share by the corporation in its charter. In many states, this amount establishes the minimum legal capital, which refers to the least amount that the buyers of stock must contribute or be subject to paying at future dates. a. general b. par c. common d. market

b. par

The market value per share is the price at which stock is bought and sold. Which of the following factors does not influence market value? a. expected future earnings b. par value c. dividends d. growth

b. par value

_____ value stock is no-par stock to which the directors assigned a certain value per share. This value becomes the minimum legal capital per share in this case. a. Adjusted-par b. General c. Stated

c. Stated

Darby, Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called __________ stock.

common

A ___________ is an entity created by law that is separate from its owners. Owners are called stockholders or shareholders. These entities can be privately or publicly held.

corporation

When all authorized shares of stock have the same rights and characteristics, the stock is called _______ stock. a. corporate b. preferred c. general d. common

d. common

Identify which of the following is not generally a right of common stockholders. a. vote at stockholders' meeting b. purchase proportional shares if new stock is issued c. receive dividends if issued d. manage operations e. share any remaining assets if the corporation is liquidated f. sell stock

d. manage operations

While stockholders elect the board of directors of a corporation, the board of __________ hires the president, vice president and other officers, who manage the corporation.

directors

Jordan Inc.'s charter states that there are 50,000 shares of stock authorized with a par value of $5 per share. This typically means that investors must pay a (minimum/maximum) __________ of $5 per share to invest in the corporation.

minimum