Question 1

A company whose shares trade on a stock exchange is a:

Accepted Answer

A)  private corporation.
B)  limited partnership.
C)  partnership.
D)  public corporation.E) B) and C)
F) A) and C)

Question 2

Which of the following statements is true?

Accepted Answer

A)  Dividends are guaranteed to preferred shareholders.
B)  Dividends accumulate on common shares.
C)  Dividends are only issued if the board of directors declares them.
D)  Dividends are paid to all classes of shares on the same basis.E) All of the above
F) B) and D)

Question 3

Stock splits are usually declared in order to:

Accepted Answer

A)  increase the number of shares outstanding.
B)  improve the earnings per share.
C)  reduce the shareholders' equity.
D)  reduce the shares' market price.E) A) and D)
F) B) and C)

Question 4

Sole Proprietorships are taxable entities.

Accepted Answer

A) True 
 B)False

Question 5

The balance sheet shows all the dividends declared during the year.

Accepted Answer

A) True 
 B)False

Question 6

Liability is limited in all of the following organizational structures, except for:

Accepted Answer

A)  Private Corporations
B)  Public Corporations
C)  Limited Partnerships
D)  All of aboveE) A) and B)
F) All of the above

Question 7

Which form of organization has both limited and unlimited liability?

Accepted Answer

A)  Corporation
B)  Limited partnership
C)  Partnership
D)  Sole proprietorshipE) A) and B)
F) A) and C) B

Question 8

Which form of organization is a taxable entity?

Accepted Answer

A)  Corporation
B)  Limited partnership
C)  Partnership
D)  Sole proprietorshipE) A) and D)
F) None of the above

Question 9

Property dividends are valued using:

Accepted Answer

A)  the most recent cash dividend paid by the corporation.
B)  the fair market value of the asset given up.
C)  the book value of the asset given up.
D)  the balance in the corporation's retained earnings account.E) A) and B)
F) A) and C)

Question 10

Which of the following groups are the ultimate decision makers in a public corporation?

Accepted Answer

A)  Shareholders
B)  Audit committee
C)  Management
D)  Board of directorsE) All of the above
F) B) and C) D

Question 11

Which form of organization is a separate legal entity?

Accepted Answer

A)  Corporation
B)  Limited partnership
C)  Partnership
D)  Sole proprietorshipE) A) and D)
F) A) and C)

Question 12

Which of the following is a reason a company would declare a stock split?

Accepted Answer

A)  To increase the marketability of its shares.
B)  To increase the share price in the market.
C)  To increase the value of the company.
D)  To increase the legal paid-in capital of the company.E) B) and C)
F) All of the above

Question 13

Partnership agreements:

Accepted Answer

A)  result in equal distribution of profits and assets for all partners
B)  specify how assets will be distributed if the partnership is dissolved.
C)  can be costly and have limited value
D)  limit liability for all partners.E) None of the above
F) C) and D)

Question 14

The declaration and issuance of a stock dividend:

Accepted Answer

A)  increases total shareholders' equity.
B)  does not change total shareholders' equity.
C)  increases current liabilities.
D)  does not change total retained earnings.E) A) and D)
F) None of the above

Question 15

Small stock dividends are accounted for using the fair market value of the shares on the date of declaration.

Accepted Answer

A) True 
 B)False

Question 16

Which form of organization is subject to double taxation?

Accepted Answer

A)  Sole proprietorship
B)  Corporation
C)  Partnership
D)  Limited partnershipE) A) and B)
F) A) and D) B

Question 17

Earnings per share provides a measure of the earnings relative to the number of common shares outstanding.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a reason companies issue stock options to their employees?

Accepted Answer

A)  It is a form of compensation
B)  If employees are owners they may work harder for the company
C)  If the company grows, their shares will increase in value
D)  All of the aboveE) A) and C)
F) A) and B)

Question 19

A change in accounting policy requires an adjustment to opening retained earnings.

Accepted Answer

A) True 
 B)False

Question 20

An additional paid in capital account under shareholder's \ owner's equity is the result of:

Accepted Answer

A)  legal capital
B)  the sale of par value shares
C)  the sale of no par value shares
D)  sale of preferred shares.E) A) and C)
F) None of the above

Exam 11: Shareholders Equity

A company whose shares trade on a stock exchange is a:

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Stock splits are usually declared in order to:

Correct AnswerverifiedShow Answer

Sole Proprietorships are taxable entities.

Correct AnswerverifiedShow Answer

The balance sheet shows all the dividends declared during the year.

Correct AnswerverifiedShow Answer

Liability is limited in all of the following organizational structures, except for:

Correct AnswerverifiedShow Answer

Which form of organization has both limited and unlimited liability?

Correct AnswerverifiedB

Which form of organization is a taxable entity?

Correct AnswerverifiedShow Answer

Property dividends are valued using:

Correct AnswerverifiedShow Answer

Which of the following groups are the ultimate decision makers in a public corporation?

Correct AnswerverifiedD

Which form of organization is a separate legal entity?

Correct AnswerverifiedShow Answer

Which of the following is a reason a company would declare a stock split?

Correct AnswerverifiedShow Answer

Partnership agreements:

Correct AnswerverifiedShow Answer

The declaration and issuance of a stock dividend:

Correct AnswerverifiedShow Answer

Small stock dividends are accounted for using the fair market value of the shares on the date of declaration.

Correct AnswerverifiedShow Answer

Which form of organization is subject to double taxation?

Correct AnswerverifiedB

Earnings per share provides a measure of the earnings relative to the number of common shares outstanding.

Correct AnswerverifiedShow Answer

Which of the following is a reason companies issue stock options to their employees?

Correct AnswerverifiedShow Answer

A change in accounting policy requires an adjustment to opening retained earnings.

Correct AnswerverifiedShow Answer

An additional paid in capital account under shareholder's \ owner's equity is the result of:

Correct AnswerverifiedShow Answer

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B

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D

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B

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