1. Preferred stock offers shareholders the right to ________. receive dividends after the common shareholders receive any dividends voting rights receive, in the event of bankruptcy, a share of the assets before common shareholders pre-emptive rights 2. In exchange for stock, corporations may receive ________. income earnings cash or other assets treasury stock 3. ________ is the stock sold to the public. Issued stock Outstanding stock Authorized stock Treasury stock 4. The owners of ________ stock have the specific right to vote for members of the board of directors. preferred treasury common both common and preferred 5. A monetary value assigned to and printed on each share of stock is called ________. par value retained earnings paid-in capital additional paid-in capital 6. AZ Best, Inc.’s corporate charter allows it to issue 1,500,000 shares of common stock. In 2011, its first year of business, the company sold 200,000 shares of common stock. In 2011, the company bought back 5,000 shares to be held as treasury stock. At December 31, 2011, how many shares of common stock are outstanding? 1,300,000 shares 200,000 shares 5,000 shares 195,000 shares 7. A difference between preferred stock and common stock is preferred shareholders ________. have voting rights, while common shareholders do not have the right to share in any assets left if the company goes out of business after both the creditors and common shareholders receive their share must receive their dividends before any of the common shareholders are paid have the right to buy new shares in order to maintain their percentage ownership before the company can issue new shares to the general public 8. Team Shirts reported total shareholders’ equity of $80,000 on its October 31 balance sheet. During November, the business earned $270,000, and declared and paid a cash dividend of $20,000. What was total shareholders’ equity on November 30? $330,000 $350,000 $250,000 $80,000 9. The date of record is the date ________. when cash is actually paid to the shareholders on which the board of directors of a corporation announces that a dividend will be paid when earnings are declared used to determine exactly who will receive dividends 10. A company has 2,000 shares of $100 par, 6%, noncumulative preferred stock outstanding. If the board of directors declares a dividend this year, how much will the preferred shareholders receive? $200,000 in total $6 per share $60 per share $100 per share 11. Treasury stock ________. is a contra-equity account is the amount of stock issued by the company is a contra-asset account results in an increase in total shareholders’ equity 12. When a company buys shares of its own stock and holds them as treasury stock, ________. its earnings per share will increase its earnings per share are not affected its earnings per share will decrease the market price of its stock will decrease 13. A corporation’s distribution of new shares of stock to the corporation’s current shareholders is called a ________. stock split stock dividend cash dividend liquidating dividend 14. Equitable, Inc. issued no new common stock and had 100,000 shares issued and outstanding during 2011. The following information is taken from Equitable’s accounting records.Net income for the year ended, December 31, 2011$370,000Retained earnings, December 31, 2010$280,000Retained earnings, December 31, 2011$360,000Total shareholders’ equity at December 31, 2011$725,000 What was the dividend declared during the year ended December 31, 2011? $290,000 $365,000 $725,000 $360,000 15. Team Shirts issued 20,000 shares of stock for $20 per share. This transaction increased Cash $400,000 and increased ________ $400,000. Paid-in capital Treasury stock Retained earnings Additional paid-in capital 16. PDG Corporation had a return on equity of 18%. Beginning and ending shareholders’ equity for the corporation were $570,000 and $560,000 respectively. There were 350,000 common shares and no preferred shares outstanding. What was net income for the year? $101,700 $3,138,888.89 $63,000 $1,944,444.44 17. Use the following information for Equitable, Inc. to answer the following question(s). Equitable issued no new common stock and had 100,000 common shares issued and outstanding during 2011. Equitable has no preferred stock. Net income for the year ended, December 31, 2011 $370,000Retained earnings, December 31, 2010 $280,000Retained earnings, December 31, 2011 $360,000Total shareholders’ equity at December 31, 2011 $725,000Total liabilities at December 31, 2010 $105,000Total liabilities at December 31, 2011 $385,000Total assets at December 31, 2010 $750,000What was earnings per share for the year ended December 31, 2011? $0.51 $370,000 $7.50 $3.70 18. Return on equity is ________. net income divided by the average number of common shares outstanding total shareholders’ equity divided by the average number of outstanding common shares net income divided by sales net income divided by average shareholders’ equity 19. Team Shirts had net income of $23,000. The balance sheet showed beginning and ending balances in shareholders’ equity of $100,000 and $110,000, respectively. There were no preferred shares and 20,000 common shares outstanding. Calculate the return on equity. 21.9% 5.25% 1.15% 4.56% 20. Risks associated with owning an investment in a company’s stock include the risk that ________. the company may not be able to buy back the stock when it maturesthis particular stock becomes part of a diversified portfoliothe company will not be able to make regular interest payments to shareholdersthe company will not be successful
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