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Acc 203 Ch 11
Stack #59599
| Question | Answer |
|---|---|
| Par value has nothing to do with a stock’s worth. | T |
| Final authority in the management of corporation affairs rests with its board of directors. | T |
| The life of a corporation may be unlimited. | T |
| To transfer and sell his or her interest in a corporation, a stockholder must secure permission from the corporation’s secretary. | F |
| The chief executive officer of a corporation is usually elected by the stockholders at one of their annual meetings. | F |
| The president of a corporation is responsible to its board of directors for management of the corporation’s affairs. | T |
| A discount on stock is the difference between market value and the amount at which stock is issued when the stock is issued at a price below its par value. | F |
| A small stock dividend should be recorded by capitalizing retained earnings equal to the book value of the stock to be distributed. | F |
| In most states, a corporation must have current net income in order to pay a cash dividend. | F |
| Since a stock dividend is payable in stock rather than in assets, it is not a liability of its issuing corporation. | T |
| A stock split has no effect on total stockholders’ equity, the equities of the individual stockholders, or on the balances of any of the contributed or retained capital accounts. | T |
| Dividend yield is an estimate of how much one share of stock will yield in cash dividends per year. | F |
| A company with common stock having a market value of $45 per share and earnings of $5 per share has a price earnings ratio of 9. | T |
| A cash dividend reduces a corporation’s cash and its stockholders’ equity, but a stock dividend does not affect either cash or total stockholders’ equity. | T |
| The cumulative effect on prior years’ incomes of a change in accounting principle is reported on the statement of retained earnings. | F |
| For companies with simple capital structures, earnings per share is calculated by dividing net income minus preferred dividends, if any, by the weighted average number of common shares outstanding. | T |
| Hadley Corporation stock has a current market value of $16 and is expected to pay cash dividends of $1.20 during the next year. The expected dividend yield of Hadley stock is 7.5%. | T |
| The difference between the par value of stock and its issue price when it is issued at a price above par value is the | Premium on stock |
| Participating preferred stock is: | Preferred stock that gives its owners the right to share in dividends in excess of the stated percentage or amount |
| Stated value of stock is: | An arbitrary amount assigned to stock by the corporation’s board of directors which is credited to the stock account when the stock is issued |
| The statement of changes in stockholders’ equity is: | e. none of the above |
| Laws establishing minimum legal capital requirements were written to protect ____________ ________ with the protection resulting from making illegal the payment of any dividends that reduce stockholders’ equity below _______ _____ ______. | corporation creditors; minimum legal capital |
| When stock is issued at a price above its par value, the difference between par and the price at which the stock is issued is called a _______. | premiium |
| Advantages claimed for no-par stock are: (a) it may be issued at any price without ________ _________, (b) uniformed persons buying such stock are not misled as to the stock’s worth by a ___ _____ printed on the certificates | discount liability; par value |
| Laws setting minimum legal capital requirements normally require stockholders to invest, in a corporation, assets equal in value to minimum legal capital or be contingently liable to ___________ _________ for the deficiency. | corporation creditors |
| A preferred stock is so called because of the preferences granted its owners. The two most common preferences are a preference as to ___ ________ __ _________, and a preference __ ___ ____________ __ ______ __ ___ ___________ __ __________. | the payment of dividends; in the distribution of assets if the corporation is liquidated |
| In many jurisdictions, when a corporation issues par value stock, it establishes for itself a _______ _____ _______ equal to the par value of the issued stock. | minimum legal capital |
| In addition to its separate legal existence, other characteristics of a corporation as a form of business organizations are ____ , ____, ____, ____, ____, ____, and ____. | lack of stockholder liability; ease of transferring ownership rights, continuity of life, stockholders are not agents, ease of capital assembly, increased governmental regulation, and double taxation |
| A corporation is said to be a separate legal entity; this phrase means that in a legal sense a corporation is _______________________. | an individual body, separate and distinct from its stockholders |
| When a corporation purchases treasury stock, a portion of its retained earnings equal to the cost of the treasury stock becomes ___________ and unavailable for _________. | restricted; dividends |
| If treasury stock is reissued at a price above cost, the amount received in excess of cost is credited to __________________, _________________. | Contributed Capital, Treasury Stock |
| If treasury stock is sold below cost, the difference between cost and the sale price is debited to either __________, __________ or _______________. | Contributed Capital, Treasury Stock or Retained Earnings |
| A stock dividend enables a corporation to give its shareholders some evidence of their interest in its retained earnings without reducing the corporation’s ____ or _________. | cash or other assets |
| Issued stock that has been reacquired by the issuing corporation is called ___________________. | treasury stock |
| If the book value of a share of common stock before the declaration and distribution of a 20% stock dividend was $90, the declaration and distribution of the dividend changed the book value to $ | $75 |
| If a corporation has sufficient cash to pay a dividend, it must also have sufficient ___________ before it pays that dividend | retained earnings |
| A small stock dividend contains a number of shares amounting to __% or less of the previously outstanding shares. | 25% |
| Changes in accounting estimates _____ prior period adjustments. | are not |
| The results of discontinued segments are separated from the results of other activities on the income statement in order to __________________________________________. | more clearly present the result of continuing operations |
| Earnings per share calculated as if all dilutive securities had already been converted are called ________________. | diluted earnings per share |
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stargtgyal