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1 Shares of a corporation’s stock that have been issued and then reacquired, but not canceled, are called:
a. Recalled stock. b. Preferred stock. c. Treasury stock. d. Par value stock.
2 Garner Corporation is authorized to issue 1,000,000 shares of $1 par value common stock. On March 5, the company issues 20,000 shares when the market price is $10 per share. The journal entry to record the issuance of these shares will include all except which of the following?
a. Debit Cash for $200,000.
b. Credit Common Stock for $20,000.
c. Credit Additional Paid-in Capital for $180,000
d. Debit Retained Earnings for $100,000.
3 Which of the following would not appear in the Stockholders’ Equity section of a company’s balance sheet?
a. Bonds Payable b. Common Stock c. Preferred Stock d. Retained Earnings
4 Which of the following statements is not true?
a. Net income increases Retained Earnings.
b. Dividends reduce Retained Earnings.
c. Stock splits reduce Retained Earnings.
d. Net losses reduce Retained Earnings.
6 How is a “dividend yield” calculated?
a. Annual dividend divided by the stock’s market value.
b. The stock’s market value divided by the annual dividend.
c. Annual dividend multiplied by the stock’s market value.
d. The stock’s market value divided by earnings per share
7 A bank or trust company retained by a corporation to maintain its records of capital stock ownership and make transfers from one investor to another is called a(n):
b. Stock transfer agent.
c. Corporate guardian.
d. Exchange organizer.
8 Which of the following components of stockholders’ equity is not considered paid-in capital?
a. Common Stock
b. Preferred Stock
c. Additional Paid-in Capital
d. Retained Earnings
9 Which of the following is not a characteristic of the common stock of a large, publicly-owned corporation
a. A cumulative right to receive dividends.
b. The shares may be transferred from one investor to another without disrupting the continuity of business operations.
c. Voting rights in the election of the board of directors.
d. After issuance, the market value of the stock is unrelated to its par value.
10. When a business is organized as a corporation, which of the following statements is true?
a. Stockholders are liable for the debts of the business in proportion to their percentage ownership of capital stock.
b. Fluctuations in the market value of outstanding shares of capital stock do not directly affect the amount of stockholders’ equity shown in the balance sheet.
c. Stockholders do not have to pay personal income taxes on dividends received, because the corporation is subject to income taxes on its earnings.
d. Each stockholder has the right to bind the corporation to contracts and to make other managerial decisions