- Description
ACC 291 Week 4 Practice Quiz
Practice Question 01
The stockholders of a corporation have unlimited liability.
True |
False |
Practice Question 05
Which of the following is a disadvantage of the corporate business form?
No income taxes |
Easy acquisition of capital |
Government regulation |
Continuous life |
Practice Question 10
If a corporation issues 1,000 shares of $3 par common stock for $7 a share, how much is the legal capital?
$3,000 |
$7,000 |
$0 |
$4,000 |
Practice Question 20
For what reason might a company acquire treasury stock?
To increase the number of shares of stock outstanding |
To reissue the shares to officers and employees under bonus and stock compensation plans |
To signal to the stock market that management believes the stock is overpriced |
To increase profit |
Practice Question 30
Which one of the following is not a right of preferred stockholders?
Priority to the assets in the event of liquidation |
Priority in relation to dividends |
Priority voting rights |
Priority to dividends and assets in liquidation. |
Practice Question 59
If everything else is held constant, what will cause earnings per share to increase?
The purchase of treasury stock |
The payment of a cash dividend to preferred stockholders |
The issuance of new shares common stock |
The payment of a cash dividend to common stockholders |
Practice Question 56
Which of the following does not increase the return on common stockholders’ equity?
An increase in the return on assets ratio |
An increase in the use of debt financing |
An increase in the company’s stock price |
An increase in the company’s net income |
Practice Question 60
When a stock dividend is declared, which of the following accounts is debited?
Common Stock Dividends Distributable |
Paid-in Capital in Excess of Par Value |
Common Stock |
Stock Dividends |
Practice Question 55
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?
4% |
40% |
20% |
2% |
Practice Question 54
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?
19.50% |
20.00% |
21.25% |
18.75% |