True-False Statements ( Quiz 2)
A 3 for 1 common stock split will increase total stockholders' equity but reduce the par or stated value per share of common stock
F
A corporation can issue more shares than it is authorized in its charter, if the board of directors approves of an increase in the number of authorized shares.
F
A corporation is not an entity which is distinct from its owners
F
Book value per share is the same thing as liquidation perpetual life.
F
Book value per share of common stock is the same amount as the market value per share.
F
Each stockholder in a corporation has a separate capital account in the capital account in the stockholders' equity section of the balance sheet.
F
If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from that corporation.
F
Retained earnings represents the amount of cash available for dividends.
F
Return on common stockholder's equity is computed by dividing net income by ending stockholders' equity.
F
The par value of common stock must always be equal to its market value on the date the stock is issued.
F
When a corporation has only one class of capital stock, it is identified as preferred stock.
F
A corporation can be organized from the purpose of making a profit or it may be nonprofit
T
A stockholder has the right to vote in the election of the board of directors.
T
A successful corporation can have a continuous and perpetual life.
T
Dividends may be declared and paid in cash or stock.
T
Earnings per share indicated the net income earned by each share of outstanding common stock.
T
Preferred stockholders generally do not have the right to vote for the board of directors.
T
Retained earnings are a part of stockholder's equity.
T
The number of common shares outstanding can never be greater than the number of shares issued.
T