Chapter 11 Stockholders Equity Multiple Choice

Which of the following statements about the relative advantages of equity and debt financing is false?

An advantage of equity financing is that new stockholders get to vote and share in the earnings of the company.

When stock is purchased with cash and held in treasury, what is the impact on the balance sheet equation?

Assets decrease and stockholders equity decrease

Which statement regarding dividends is false?

Cash dividends paid to stockholders reduce net income

A journal entry is not recorded on what date?

Date of Record

Which of the following transactions will increase the return on equity?

Repurchase the company's stock

Which feature is not applicable to common stock ownership?

Right to receive before preferred stock shareholders

Which of the following is ordered from the largest number of shares to the smallest number of shares?

Shares authorized, shares issued, shares outstanding.

In what situation does total stockholders equity decrease?

When a cash dividend is declared

Which of the following statements about stock dividends is true?

a. stock dividends are reported on the income statement b. stock dividends increase total stockholders equity c. stock dividends decrease total stockholders equity. ******d. none of the above

Which statement regarding treasury stock is false?

a. treasury stock is considered to be issued but not outstanding b. treasury stock has no voting, dividend, or liquidation rights. c. treasury stock reduces total stockholders equity on the balance sheet ******d. none of the above are false