Question 1

A corporation does not have a legal obligation to pay dividends.

Accepted Answer

A) True 
 B)False

Question 2

A corporate charter specifies that the company may sell up to 20 million shares of stock.The company sells 12 million shares to investors and later buys back 3 million shares.The number of issued shares after these transactions have been accounted for is:

Accepted Answer

A)  12 million shares.
B)  9 million shares.
C)  10 million shares.
D)  17 million shares.E) C) and D)
F) B) and C)

Question 3

A liability for dividends is recorded on the date of record.

Accepted Answer

A) True 
 B)False

Question 4

A company issues 1 million shares of preferred stock with a par value of $2 and a market price of $26 per share.The issuance should be recorded as:

Accepted Answer

A)  a debit to Cash of $26 million and a credit to Preferred Stock of $26 million.
B)  a debit to Cash of $2 million and a credit to Preferred Stock of $2 million.
C)  a debit to Cash of $26 million,a credit to Additional Paid-in Capital of $2 million,and a credit to Preferred Stock of $24 million.
D)  a debit to Cash of $26 million,a credit to Preferred Stock of $2 million,and a credit to Additional Paid-in Capital of $24 million.E) None of the above
F) A) and B)

Question 5

Earnings per share can be affected by all of the following except:

Accepted Answer

A)  how the company chose to finance its operations.
B)  the method of depreciation.
C)  the inventory cost method.
D)  classification of debt as current or long-term.E) None of the above
F) A) and D)

Question 6

A major advantage of debt financing is that interest expense is tax deductible.

Accepted Answer

A) True 
 B)False

Exam 11: Stockholders Equity

A corporate charter specifies that the company may sell up to 20 million shares of stock.The company sells 12 million shares to investors and later buys back 3 million shares.The number of issued shares after these transactions have been accounted for is:

Correct Answer
verified

Earnings per share can be affected by all of the following except:

Correct Answer
verified

A liability for dividends is recorded on the date of record.

Correct Answer
verified

A company issues 1 million shares of preferred stock with a par value of $2 and a market price of $26 per share.The issuance should be recorded as:

Correct Answer
verified

A major advantage of debt financing is that interest expense is tax deductible.

Correct Answer
verified

A corporation does not have a legal obligation to pay dividends.

Correct Answer
verified

Exam 11: Stockholders Equity

A corporate charter specifies that the company may sell up to 20 million shares of stock.The company sells 12 million shares to investors and later buys back 3 million shares.The number of issued shares after these transactions have been accounted for is:

Correct AnswerverifiedShow Answer

Earnings per share can be affected by all of the following except:

Correct AnswerverifiedShow Answer

A liability for dividends is recorded on the date of record.

Correct AnswerverifiedShow Answer

A company issues 1 million shares of preferred stock with a par value of $2 and a market price of $26 per share.The issuance should be recorded as:

Correct AnswerverifiedShow Answer

A major advantage of debt financing is that interest expense is tax deductible.

Correct AnswerverifiedShow Answer

A corporation does not have a legal obligation to pay dividends.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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