Multiple Choice Questions
1. Buying stock in a corporation is attractive to investors because:
A) Stockholders are not liable for the corporation's actions and debts.
B) Stock is easily transferred.
C) A corporation has unlimited life.
D) Shareholders are not agents of the corporation.
E) All of the above.
2. When all of the authorized shares have the same rights and characteristics, the stock is called
A) Preferred stock.
B) Common stock.
C) Par value stock.
D) Stated value stock.
E) No-par value stock.
3. Stockholders' equity consists of:
A) Long-term assets.
B) Contributed capital and retained earnings.
C) Contributed capital and par value.
D) Retained earnings and cash.
E) Premiums and discounts.
4. A dividend preference for preferred stock means that:
A) Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders.
B) Preferred shareholders are guaranteed dividends.
C) Dividends are paid quarterly.
D) Preferred stockholders prefer dividends more than common stockholders.
E) Dividends must be declared on preferred stock.
5. Reporting of discontinued segments includes:
A) Income or loss from operating the discontinued segment net of tax and gain or loss from disposal of the segment's net assets net of tax.
B) Extraordinary items.
C) Changes in accounting principle.
D) Items that are both unusual and infrequent.
E) Writing off of receivables.
6. Retained earnings:
A) Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.
B) Can only be appropriated by setting aside a cash fund.
C) Represent an amount of cash available to pay shareholders.
D) Are never adjusted for anything other than net income or dividends.
E) All of the above.
7. The statement of changes in stockholders' equity:
A) Is part of the statement of retained earnings.
B) Shows only the ending balances in stockholders' equity.
C) Describes changes in contributed capital and retained earnings subcategories.
D) Does not include changes in treasury stock.
E) Is reported by very few companies.
www.coursehero.com/file/6688441/ACC-Final-Review/
8. Book value per share:
A) Reflects the value per share if a company is liquidated at balance sheet amounts.
B) Is assets divided by equity.
C) Is assets divided by the number of common share outstanding.
D) Measures the worth of assets.
E) Is equal to par value per share.
9. The dividend yield is computed by dividing:
A) Cash dividends per share by earnings per share.
B) Earnings per share by cash dividends per share.
C) Cash dividends per share by the market price per share.
D) Market price per share by cash dividends per share.
E) Cash dividends per share by retained earnings.
10. The price-earnings ratio is calculated by dividing:
A) Market value per share by earnings per share.
B) Earnings per share by market value per share.
C) Dividends per share by earnings per share.
D) Dividends per share by market value per share.
E) Market value per share by dividends per share.