Reference no: EM132450376

Questions -

Question 1 - The stockholders of a corporation have unlimited liability.

a. True

b. False

Question 2 - Which of the following is a disadvantage of the corporate business form?

a. Continuous life

b. No income taxes

c. Government regulation

d. Easy acquisition of capital

Question 3 - If a corporation issues 1,000 shares of $3 par common stock for $7 a share, how much is the legal capital?

a. $7,000

b. $3,000

c. $0

d. $4,000

Question 4 - For what reason might a company acquire treasury stock?

a. To reissue the shares to officers and employees under bonus and stock compensation plans

b. To increase the number of shares of stock outstanding

c. To signal to the stock market that management believes the stock is overpriced

d. To increase profit

Question 5 - Which one of the following is not a right of preferred stockholders?

a. Priority voting rights

b. Priority in relation to dividends

c. Priority to dividends and assets in liquidation.

d. Priority to the assets in the event of liquidation

Question 6 - If everything else is held constant, what will cause earnings per share to increase?

a. The issuance of new shares common stock

b. The payment of a cash dividend to preferred stockholders

c. The payment of a cash dividend to common stockholders

d. The purchase of treasury stock

Question 7 - Which of the following does not increase the return on common stockholders' equity?

a. An increase in the company's stock price

b. An increase in the company's net income

c. An increase in the return on assets ratio

d. An increase in the use of debt financing

Question 8 - When a stock dividend is declared, which of the following accounts is debited?

a. Paid-in Capital in Excess of Par Value

b. Common Stock

c. Stock Dividends

d. Common Stock Dividends Distributable

Question 9 - Jaylo Inc. had net income of $500,000, net sales of $10,000,000 and paid cash dividends of $200,000 to the common stockholders. How much is Jaylo's payout ratio?

a. 40%

b. 20%

c. 2%

d. 4%

Question 10 - Consider the following data for a corporation:

Net income - $800,000

Preferred stock dividends - $50,000

Market price per share of stock - $25

Average common stockholders' equity - $4,000,000

Cash dividends declared on common stock - $20,000

What is the return on common stockholders' equity?

a. 19.50%

b. 18.75%

c. 21.25%

d. 20.00%