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1 | |
Which of the following is not a right or attribute of common stock ownership? |
| | A) | Electing directors. |
| | B) | Liability limited to amount invested. |
| | C) | Approving changes in corporate charter. |
| | D) | Determining dividend policy. |
| | E) | All of the above are rights of common stock ownership. |
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2 | |
If a common stock has no par value: |
| | A) | there is no way of determining the market value per share. |
| | B) | the stock must have a stated value. |
| | C) | there will not be any additional paid-in capital related to it. |
| | D) | the common stockholders are not allowed to have a preemptive right. |
| | E) | the company's shares cannot be listed on an organized stock exchange. |
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3 | |
Which of the following is not usually a right or attribute of preferred stock? |
| | A) | Having a claim to dividends in excess of the annual dividend requirement if dividends on common stock exceed dividends on preferred stock. |
| | B) | Having a priority claim to dividends relative to the common stock's claim to dividends. |
| | C) | Having a priority claim in liquidation relative to the common stock's claim in liquidation. |
| | D) | Having a claim to dividends that is cumulative over time if the annual dividend requirement is not satisfied. |
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4 | |
The number of shares of a class of stock that are outstanding is the shares: |
| | A) | authorized minus the shares issued. |
| | B) | authorized minus the shares held in the treasury. |
| | C) | shares issued minus the shares held in the treasury. |
| | D) | shares issued minus the shares owned by directors. |
| | E) | shares held in treasury minus the shares owned by directors. |
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5 | |
A stock dividend is similar to a cash dividend in that: |
| | A) | the stockholder's equity in the firm's net assets is reduced by each. |
| | B) | the stockholder's cash is increased by each. |
| | C) | the stockholder's equity in the firm's net assets is increased by each. |
| | D) | retained earnings and the amount of potential future dividends is reduced by each. |
| | E) | each is an application of the return on investment concept. |
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6 | |
The principal reason for a company having a common stock split is to: |
| | A) | increase the total cash dividends paid to stockholders. |
| | B) | capitalize retained earnings. |
| | C) | decrease total owners' equity. |
| | D) | decrease the market value per share of common stock. |
| | E) | change from par value to no par value stock. |
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7 | |
Treasury stock involves shares which are: |
| | A) | authorized, but not yet issued. |
| | B) | authorized, issued, and outstanding. |
| | C) | issued and outstanding, but not yet authorized. |
| | D) | not yet authorized. |
| | E) | authorized and issued, but not currently outstanding. |
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8 | |
Similarities between preferred stock and bonds include all of the following, except: |
| | A) | Each has a fixed claim to annual income (dividends and interest, respectively). |
| | B) | Each has a fixed claim on assets (liquidating value and principal amount, respectively). |
| | C) | Each allows the corporation a tax deduction (dividends and interest, respectively). |
| | D) | Each may be callable and/or convertible. |
| | E) | All of the above are similarities between preferred stock and bonds. |
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9 | |
Which of the following would not affect total Retained Earnings? (Assume it is the end of the fiscal year, and that the books have been closed.) |
| | A) | Cash dividends. |
| | B) | Net Income. |
| | C) | Stock dividends. |
| | D) | Stock splits. |
| | E) | All of the above would affect total Retained Earnings. |
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10 | |
Which of the following does not appear in the owners' equity section of a balance sheet? |
| | A) | Preferred Stock |
| | B) | Minority Interest in Subsidiaries |
| | C) | Additional Paid-in Capital |
| | D) | Accumulated Other Comprehensive Income (Loss) |
| | E) | Treasury Stock |
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2002 McGraw-Hill Higher Education