- 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% |