Deck 11: Stockholders Equity

Question 1

A company sells 1 million shares of stock with no par value for $15 a share.In recording the transaction,it would:

A)debit Cash for $20,000 and credit Common Shares for $20,000.
B)debit Cash for $15 million and credit Common Shares for $15 million.
C)debit Cash for $15 million,credit Common Shares for $20,000 and credit Contributed surplus for $14,980,000.
D)debit Cash for $20,000,debit Capital Receivable for $14,980,000,credit Common Shares for $20,000 and credit Contributed surplus for $14,980,000.

Answer 1

debit Cash for $15 million and credit Common Shares for $15 million.

Question 2

A company has 20,000 shares of preferred shares outstanding paying 0.30 cents dividend per share.It also has 110,000 shares of common stock outstanding.If the company decides to pay a total of $35,000 in dividends.The preferred stock is cumulative with two years' dividends in arrears.What is the amount of dividend preferred stockholders will receive?

A)$6,000
B)$12,000
C)$18,000
D)$24,000

Answer 2

$18,000

Question 3

Which of the following statements would explain why a company may want to repurchase its shares?

A)To demonstrate to investors that it believes its own shares are worth purchasing.
B)To obtain shares to reissue to employees as part of an employee stock option plan.
C)To obtain shares that can be reissued as payment for purchase of another company.
D)All of the above.

Answer 3

All of the above.

Question 4

Match the descriptions with the type of stock transaction that displays the characteristic.Some letters will appear in more than one column and not all letters will necessarily be used.Some blanks will require more than one letter.

A)To reduce market price of the stock
B)To remind shareholders of their accumulating wealth.
C)To signal to investors that the company's shares are worth buying.
D)Reduces shareholders' equity.
E)Changes par value per share.
F)Changes liabilities.
G)Reduces retained earnings.
H)Does not require a journal entry.
$\begin{array}{cccl}&&\text { Small}&\text { Large }\\&\text { Stock }& \text { Stock } & \text { Stock } & \text { Cash } \\&\underline{\text { Split} }&\underline{\text { Dividend }} & \underline{\text { Dividend } }& \underline{\text { Dividend} }\\\text{Purpose:}&1.\underline{\quad\quad}&2.\underline{\quad\quad}&3.\underline{\quad\quad}&4.\underline{\quad\quad}\\\text{Effects:}&5.\underline{\quad\quad}&6.\underline{\quad\quad}&7.\underline{\quad\quad}&8.\underline{\quad\quad}\end{array}$

Question 5

The incorporation of companies in the Canada is controlled by:

A)the courts.
B)the provincial government.
C)BT: Knowledge
D)the Federal government.
E)B or

Question 6

Shareholders of a corporation directly elect:

A)the president of the corporation.
B)the board of directors.
C)the treasurer of the corporation.
D)all of the employees of the corporation.

Question 7

Which of the following is the first chance given to existing shareholders to buy newly issued shares before they are offered to others?

A)Residual claim
B)Pre-emptive rights
C)Voting rights
D)Stock dividend rights

Question 8

Which of the following affects total shareholders' equity?

A)Stock split
B)Stock dividend
C)Cash dividend
BT: Knowledge

Question 9

Blue Star Films issues 200,000 no-par value shares for $60 per share in 2007.Three years later,it repurchases 30,000 of these shares for $80 per share.Blue Star records the repurchase in which of the following ways?

A)Debit Common Shares for $600,000 million and cash for $1.8 million and credit Contributed capital for $2.4 million.
B)Debit Common Shares for $1.8 million and retained earnings for $600,000 and credit Cash for $2.4 million.
C)Debit Common Shares for $1.8 million and contributed surplus for $600,000 and credit cash for $2.4 million.
D)Debit Cash for $2.4 million,credit Common shares for $1.8 million and credit retained earnings for $600,000.

Question 10

A corporate charter specifies that the company may sell up to 20 million shares of stock.The company sells 12 million shares to investors and later buys back 3 million shares.Of the 3 million shares bought back,the company cancels 2 million and holds 1 million.The number of issued shares after these transactions are:

A)12 million shares.
B)9 million shares.
C)10 million shares.
D)18 million shares.

Question 11

Shareholders' equity is:

A)the amount the company received for all shares when issued plus the amount of retained earnings and the amount of contributed surplus minus treasury shares.
B)the amount the company received for all shares authorized plus the amount of retained earnings and treasury shares.
C)the par value the company received for all shares issued plus the amount of retained earnings and contributed surplus minus treasury shares.
D)the amount the company received for all shares when issued minus the amount of retained earnings and treasury shares.

Question 12

A company has 20,000 shares of preferred shares outstanding paying 0.30 cents dividend per share.It also has 110,000 shares of common stock outstanding.If the company decides to pay a total of $35,000 in dividends.The preferred stock is cumulative with two years' dividends in arrears.What is the amount of dividend common stockholders will receive?

A)$17,000
B)$23,000
C)$29,000
D)Nothing

Question 13

When a company sells shares to the public for the first time,the sale is called a(n):

A)IPO or initial public offering.
B)FTI or first time issue.
C)SNI or seasoned new issue.
D)ISO or initial stock offering.

Question 14

Which of the following statements about stock dividends is true?

A)Stock dividends are reported on the income statement.
B)Stock dividends are reported on the statement of shareholders' equity.
C)Stock dividends increase total shareholders' equity.
D)Stock dividends decrease total shareholders' equity.

Question 15

Centrador issues 200,000 no-par value shares for $150 per share in 2007.Three years later,it repurchases 30,000 of these shares for $80 per share.Centrator records the repurchase in which of the following ways?

A)Debit Common Shares for $2.4 million,debit cash for $2.1 million and credit Contributed capital for $4.5 million.
B)Debit Common Shares for $4.5 million and credit Cash for $2.4 million and contributed surplus for $2.1 million.
C)Debit common shares for $4.5,debit contributed surplus for $2.4 and credit cash for $2.1 million.
D)Debit Cash for $4.5 million,credit Common shares for $2.4 million and credit Contributed Surplus for $2.1 million.

Question 16

For a business to be considered a corporation,it must:

A)be owned by an extremely large number of people.
B)be organized as a separate legal entity.
C)sell publicly traded shares.
D)all of the above.

Question 17

Holders of common shares receive certain benefits,such as a residual claim,which:

A)is the right of shareholders to be paid back their investment before anyone else if the company ceases operation.
B)is the right to oversee management of the company.
C)is the right to share in any remaining assets after creditors have been paid off if the company is liquidated.
D)is the continuing right to receive a share of profits as dividends.

Question 18

A corporate charter specifies that the company may sell up to 20 million shares of stock.The company sells 12 million shares to investors and later buys back 3 million shares.Of the 3 million shares bought back,the company cancels 2 million and holds 1 million.The number of authorized shares after these transactions are:

A)12 million shares.
B)20 million shares.
C)9 million shares.
D)18 million shares.

Question 19

Shareholders' equity does not include which of the following:

A)the present value of future dividends to be paid.
B)the total issued value of common shares.
C)retained earnings.
D)Contributed surplus.

Question 20

A corporate charter specifies that the company may sell up to 20 million shares of stock.The company sells 12 million shares to investors and later buys back 3 million shares.Of the 3 million bought back,the company cancels 2 million and holds 1 million.The current number of outstanding shares after these transactions have been accounted for is:

A)8 million shares.
B)20 million shares.
C)10 million shares.
D)9 million shares.

Question 21

The payment date for a dividend is the date on which the company:

A)debits Dividends Declared and credits Dividends Payable for the amount of the dividend.
B)debits Dividend Expense and credits Cash for the dividend amount.
C)debits Dividends Payable and credits Cash for the dividend amount.
D)establishes who will receive the dividend payment.

Question 22

Which of the following statements about dividends is not true?

A)Dividends represent a sharing of corporate profits with owners.
B)Both stock dividends and cash dividends reduce retained earnings.
C)Cash dividends paid to shareholders reduce net income.
D)Dividends are declared at the discretion of the board of directors.

Question 23

Which of the following statements accurately explains why the board of directors of a company that is facing financial difficulties might issue a 2-for-1 stock split rather than declare a 100% stock dividend?

A)A stock split would not reduce the market price per share,whereas a stock dividend would.
B)A stock split would reduce the market price per share,whereas a stock dividend would not.
C)A stock split would increase total shareholders' equity,whereas a stock dividend would not.
D)A stock split would not reduce retained earnings,whereas a stock dividend would.

Question 24

On February 16,a company declares a 34'dividend to be paid on April 5 to shareholders of record on March 9.There are 2 million shares of common shares outstanding and 100,000 shares of treasury shares.What accounting entries does the company record on February 16?

A)A debit to Dividends Payable and a credit to Cash,each for $646,000.
B)A debit to Dividends Declared and a credit to Dividends Payable,each for $646,000.
C)A debit to Dividends Payable and a credit to Cash,each for $680,000.
D)A debit to Dividends Declared and a credit to Dividends Payable,each for $714,000.

Question 25

The date of record for a dividend is the date on which the company:

A)debits Dividends Declared and credits Dividends Payable for the amount of the dividend.
B)debits Dividend Expense and credits Cash for the dividend amount.
C)debits Dividends Payable and credits Cash for the dividend amount.
D)establishes who will receive the dividend payment.

Question 26

Preferred shares differ from common shares in that preferred shares:

A)have more voting power and,as such,greater control over the management of the company.
B)because preferred shareholders are paid dividends before common shareholders.
C)receive a tax-free dividend.
D)all of the above.

Question 27

On February 16,a company declares a 34'dividend to be paid on April 5 to shareholders of record on March 9.There are 2 million shares of common shares outstanding and 100,000 shares of treasury shares.What accounting entries does the company make on April 5?

A)A debit to Dividends Payable and a credit to Cash for $714,000.
B)A debit to Dividends Declared and a credit to Dividends Payable for $680,000.
C)A debit to Dividends Payable and a credit to Cash for $646,000.
D)A debit to Dividends Declared and a credit to Dividends Payable for $646,000.

Question 28

If a corporation declares and distributes a 10% stock dividend on its common shares,the account debited is:

A)Dividends Payable.
B)Common Stock.
C)Share Capital.
D)Retained Earnings.

Question 29

Typically,all other things equal,a profitable company that pays little or no dividends:

A)is a bad investment.
B)will reinvest profits which can lead to greater growth potential.
C)will experience relatively stable stock prices over time.
D)all of the above.

Question 30

A stock dividend:

A)is the same thing as a stock split.
B)will reduce shareholders' equity just like a cash dividend.
C)will not change any of the accounts within shareholders' equity.
D)will reduce retained earnings just like a cash dividend.

Question 31

The effect of a stock dividend is to:

A)decrease total assets and shareholders' equity.
B)change the composition of shareholders' equity.
C)decrease total assets and total liabilities.
D)increase the market value per share of common shares.

Question 32

Typically,all other things equal,a profitable company that pays relatively high dividends:

A)is an attractive investment for those seeking growth.
B)will reinvest less profit which can lead to smaller growth potential.
C)will experience more growth in stock price over time.
D)all of the above.

Question 33

Stock splits and stock dividends have the following effects on retained earnings:

A)Option A
B)Option B
C)Option C
D)Option D

Question 34

Which of the following statements is true?

A)Stock splits and stock dividends both reduce the market value of a share but only stock splits reduce the book value per share of issued shares.
B)Stock splits reduce the book value of a share and stock dividends reduce the market value of a share.
C)Stock splits and stock dividends both reduce the market value of a share but only stock splits reduce the retained earnings.
D)Stock splits and stock dividends both reduce the market value of a share and the retained earnings.

Question 35

The effects of the transaction described above will be reported on the balance sheet in the:

A)liabilities section.
B)retained earnings account.
C)preferred shares account.
D)common shares account.

Question 36

Which of the following are the two financial requirements that the board of directors must consider when declaring a cash dividend? i)the retained earnings account has a positive balance greater than the dividend.
Ii)the cash account has a balance greater than the amount of the dividend declared.
Iii)the company's earnings have shown growth for the last two quarters.
Iv)the shareholders have approved the declaration of the cash dividend.

A)i and iii
B)i and ii
C)ii and iv
D)ii and iii

Question 37

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

A)decrease total liabilities and decrease shareholders' equity.
B)increase total expenses and increase total liabilities.
C)increase total assets and increase shareholders' equity.
D)decrease total assets and decrease shareholders' equity.

Question 38

The declaration date for a dividend is the date on which the company:

A)debits Dividends Declared and credits Dividends Payable for the amount of the dividend.
B)debits Dividend Expense and credits Cash for the dividend amount.
C)debits Dividends Payable and credits Cash for the dividend amount.
D)establishes who will receive the dividend payment.

Question 39

The journal entry to record the transaction will consist of a debit to Cash for $600,000 and a credit (or credits)to:

A)Preferred Shares for $600,000.
B)Preferred Shares for $500,000 and Additional Paid-In Capital for $100,000.
C)Preferred Shares for $500,000 and Retained Earnings for $100,000.
D)Investment in Fonthouse Shares for $600,000.

Question 40

Which one of the following events would not require a journal entry on a corporation's books?

A)2 for 1 stock split
B)100% stock dividend
C)2% stock dividend
D)$1 per share cash dividend

Question 41

In its most basic form,the earnings per share ratio is calculated as:

A)dividends paid on common shares divided by the average number of outstanding common shares.
B)net income divided by the average number of outstanding common shares.
C)total dividends paid divided by the average number of outstanding common shares.
D)net income divided by average shareholders' equity.

Question 42

A current dividend preference means that:

A)preferred shareholders are paid dividends before common shareholders are paid dividends.
B)unpaid dividends to preferred shareholders accumulate and must be paid before common shareholders receive dividends.
C)preferred shareholders are paid their full fixed dividend rate each period as long as the company is in operation.
D)unpaid cash dividends to preferred shareholders must be replaced with stock dividends during the current period.

Question 43

The return on equity ratio is calculated as:

A)dividends paid divided by the average book value of shareholders' equity.
B)net income divided by the average number of outstanding common shares.
C)dividends divided by the average number of total shares.
D)net income divided by the average shareholders' equity.

Question 44

Under IFRS preferred shares are classified as a liability if:

A)The issuing company is contractually obligated to pay dividends or redeem the shares at a future date.
B)The issuing company is contractually obligated to convert them into common shares.
C)They are not classified as a liability.
D)They are issued at a premium over the face value.

Question 45

A lender may limit the ability of a company to pay future dividends in order to ensure that loan proceeds are used for purposes that will increase the company's profits and ability to repay the loans.Which of the following statements is true in this regard?

A)The circumstance described above is an example of a loan covenant.
B)The lender may require instant repayment of debt if the loan proceeds are instead used to finance the payment of dividends.
C)Such restrictions must be reported in the notes to the financial statements.
D)All of the above.

Question 46

Preferred shareholders can anticipate receiving an annual dividend of:

A)Dollar amount per share as specified.
B)% of excess over par for each share they own.
C)% of the price at which it was issued.
D)% of the market value of the shares at the time they purchased them for each share they own.

Question 47

A company issues 1 million shares of preferred shares with a price of $26 per share.The issuance should be recorded as:

A)a debit to Cash of $26 million and a credit to Preferred Shares of $26 million.
B)a debit to preferred shares of $26 million and a credit to cash of $26 million.
C)a debit to Cash of $24 million,a debit to Treasury Shares of $2 million,and a credit to Preferred Shares of $26 million.
D)a debit to Cash of $26 million,a credit to Preferred Shares of $2 million,and a credit to Additional Paid-in Capital of $24 million.

Question 48

A company has outstanding 9 million shares of $2 par value common shares and 1 million shares of $4 par value preferred shares.The preferred shares have $0.32 dividend per share.The company declares $600,000 in total dividends for the year.Which of the following is true if dividends in arrears are $30,000?

A)Preferred shareholders will receive $350,000.Common shareholders will receive $250,000.
B)Preferred shareholders will receive $60,000.Common shareholders will receive $540,000.
C)Preferred shareholders will receive $320,000.Common shareholders will receive $280,000.
D)Preferred shareholders will receive $90,000.Common shareholders will receive $510,000.

Question 49

A company issues 100,000 shares of preferred shares for $40 a share.The stock has a fixed annual dividend rate of $0.15 per share.Preferred shareholders can anticipate receiving a dividend of:

A)$200,000 each year.
B)$15,000 each year.
C)5% of net income each year.
D)5% of the market value of the stock at the time the dividend is declared.

Question 50

A cumulative dividend preference means that:

A)preferred shareholders are paid dividends before common shareholders are paid dividends for the current year only.
B)unpaid dividends to preferred shareholders accumulate and must be paid before common shareholders receive dividends.
C)preferred shareholders are paid their full fixed dividend rate each period as long as the company is in operation.
D)unpaid cash dividends to preferred shareholders must be replaced with stock dividends during the current period.

Question 51

The ROE ratio measures:

A)return shareholders receive in dividends for each dollar of their investment.
B)return shareholders receive in dividends and stock price growth for each dollar of their investment.
C)amount earned by the company on each dollar contributed by shareholders and generated and reinvested by the company.
D)amount earned by the company on each dollar obtained from equity and debt financing.

Question 52

A corporation has 3 million shares of outstanding stock issued at market price of $5.It also has $45 million of retained earnings on its balance sheet.It announces a 2 for 1 stock split on August 1.The market price of the stock on that day is $12 per share.Which of the following would be the implication of this stock split?

A)Contributed capital will increase by $36 million
B)Retained earnings will decrease by $36 million
C)Dividends payable will increase by $36 million
D)No accounting entry will be made on this announcement.

Question 53

All else equal,when the current price for a company's stock falls and net income falls:

A)EPS decreases and ROE increases.
B)EPS and ROE both decrease.
C)EPS increases and ROE decreases.
D)EPS and ROE both increase.

Question 54

Under IFRS preferred shares are classified as a liability rather than as shareholders' equity under certain conditions.What are the implications:

A)This would affect financial ratios that use shareholders' equity and total liability.
B)This would have no affect on financial ratios.
C)This would affect only on income statement.
D)Preferred stock are never classified as a liability.

Question 55

A company reported net income of $5.6 million.At the beginning of the year,3.4 million shares of common shares were outstanding while during the year the average number of common shares outstanding was 3.5 million.There were 400,000 shares of preferred shares outstanding on average and no dividends were declared.The EPS is approximately:

A)$1.60.
B)$1.51.
C)$1.65.
D)$1.75.

Question 56

A company has outstanding 10 million shares of $2 par common shares and 1 million shares of $4 par preferred shares.The preferred shares have a $0.32 dividend per share.The company declares $300,000 in total dividends for the year.Which of the following is true if the preferred shareholders only have a current dividend preference?

A)Preferred shareholders will receive the entire $300,000,and they must also be paid $20,000 before the end of the current accounting period.Common shareholders will receive nothing.
B)Preferred shareholders will receive $24,000 or 8% of the total dividends.Common shareholders will receive the remaining $276,000.
C)Preferred shareholders will receive the entire $300,000,and they must also be paid $20,000 sometime in the future before common shareholders will receive anything.
D)Preferred shareholders will receive the entire $300,000,but will receive nothing more relating to this dividend declaration.Common shareholders will receive nothing.

Question 57

A company has 20,000 shares of preferred shares outstanding paying 0.30 cents dividend per share.It also has 110,000 shares of common stock outstanding.If the company pay a total of $15,000 dividend and the preferred stock is non cumulative,what is the amount of dividend common stockholders will receive?

A)$15,000
B)$9,900
C)$9,000
D)Nothing

Question 58

All else equal,when a company uses excess cash to buy back some of its outstanding common shares,which of the following ratios will be affected directly in the manner described below?

A)The return on equity (ROE)will decrease.
B)Earnings per share (EPS)will increase.
C)The inventory turnover ratios will increase.
D)None of the above.

Question 59

A company has net income of $5.6 million.Shareholders' equity at the beginning of the year is $32.55 million and,at the end of the year,it is $38.15 million.The only change to shareholders' equity came from net income.The ROE ratio is approximately:

A)1.15.
B)0.16.
C)0.87.
D)6.64.

Question 60

A company has outstanding 10 million shares of $2 par common shares and 1 million shares of $4 par preferred shares.The preferred shares have $0.32 dividend per share.The company declares $300,000 in total dividends for the year.Which of the following is true if the preferred shareholders have a current and cumulative dividend preference?

A)Preferred shareholders will receive the entire $300,000,and they must also be paid $20,000 before the end of the current accounting period.Common shareholders will receive nothing.
B)Preferred shareholders will receive $24,000 (8% of the total dividends).Common shareholders will receive the remaining $276,000.
C)Preferred shareholders will receive the entire $300,000,and they must also be paid the rest sometime in the future before common shareholders will receive anything.
D)Preferred shareholders will receive the entire $300,000,but will receive nothing more relating to this dividend declaration.Common shareholders will receive nothing.

Question 61

In which of the following way is the presentation of changes in shareholders' equity account treated under IFRS?

A)Changes in all equity accounts are presented in a separate statement called "statement of changes in equity".
B)Changes only in retained earnings are presented in the statement of retained earnings".
C)Changes in all equity accounts are presented in the financial notes.
D)Changes only in retained earnings are presented in a separate statement called "statement of changes in equity".

Question 62

All else equal,when companies make stock repurchases:

A)EPS falls and ROE rises.
B)EPS rises and ROE stays the same.
C)EPS rises and ROE falls.
D)EPS and ROE both rise.

Question 63

At the end of the accounting period,but before closing entries are made,Harry,the proprietor of Harry's Bar and Grill,has a debit balance of $24,500 in his drawing account and a credit balance of $72,300 in his capital account.Which of the following statements is true?

A)Harry's net income was $47,800.
B)Harry will debit the drawing account for $24,500 and credit the capital account for $24,500.
C)Harry will debit the capital account for $24,500 and credit the drawings account for $24,500.
D)Harry's retained earnings account was $47,800.

Question 64

Outstanding shares include all shares issued by a corporation which would include treasury stocks held by the issuing corporation.
BT: Knowledge

Question 65

One of the advantages of a partnership is:

A)limited liability.
B)the salaries of the partners can be written off as an expense.
C)ease of set-up.
D)all of the above.

Question 66

If you own 200,000 shares of stock in a company with 8 million shares outstanding and the company issues an additional 2 million shares to its employees through stock options,your ownership percentage:

A)remains the same because the company now has more assets.
B)falls from 2.5% to 2%.
C)remains the same because the company now has fewer liabilities.
D)increases because the company now has more stock outstanding.

Question 67

A company issues a 4 % stock dividend when the price of the stock was $6 per share.The company has 20 million common shares outstanding prior to the stock dividend.How would the company account for this stock dividend?

A)Option A
B)Option B
C)Option C
D)Option D

Question 68

Limited Liability Companies (LLCs)are like general partnerships in that:

A)income tax is not paid by the company itself.
B)the business has a separate legal identity.
C)liability is limited.
D)all of the above.

Question 69

At the end of the accounting period,but before closing entries are made,Harry,the proprietor of Harry's Bar and Grill,has a debit of $24,500 in his drawing account and a credit of $126,800 in his capital account.If his capital account has a credit balance of $137,900 after the closing,what was his net income?

A)$11,100
B)$35,600
C)$113,400
D)$13,400

Question 70

Jackson and O'Neill open a partnership that produces gates.Jackson provides $30,000 of capital while O'Neill contributes $90,000 of capital; they agree to split net income by the same proportion.The partnership's net income is $80,000 for the first year.They did not draw any income out of the business or add any additional capital during the first year.At the end of the year,the partners' equity is:

A)$70,000 for Jackson and $130,000 for O'Neill for a total of $200,000.
B)$200,000 minus income tax expense for the partnership.
C)$200,000 minus the income tax paid by each partner.
D)$50,000 for Jackson and $150,000 for O'Neill for a total of $200,000.

Question 71

If a company's EPS and ROE rise:

A)it could mean that net income is rising or it could mean that the number of outstanding shares is falling.The first is sustainable; the second cannot be continued indefinitely.
B)it means that the company is becoming more profitable and shareholders will see greater returns.
C)it means that the company's tax liability will rise in the future and cause a decline in profitability.
D)it could mean that net income is rising or it could mean that the number of outstanding shares is falling.In either case,shareholders can expect greater future returns indefinitely.

Question 72

Shareholders can vote on the appointment of external auditors.
BT: Knowledge

Question 73

A partnership is any business owned by two or more people.
BT: Knowledge

Question 74

Under IFRS changes in capital accounts are disclosed in the notes to the financial statements.
BT: Knowledge

Question 75

A restriction on retained earnings will:

A)decrease assets.
B)decrease retained earnings.
C)be included in the liabilities section of the balance sheet.
D)be disclosed in the notes to the financial statements.

Question 76

A 3 for 2 share split is the same as fifty percent share dividend.
A stock split does not affect retained earnings while a stock dividend does.
BT: Comprehension

Question 77

A corporation's charter establishes the market value of the company's shares.
BT: Comprehension

Question 78

You form a partnership with your best friend.You have contributed 65% of the capital and can claim 65% of the net income.At the end of the first year,you discover that your partner has run up $40,000 in debt using the business' credit card.The maximum you could be liable for is:

A)$0.
B)$40,000.
C)$20,000.
D)$26,000.

Question 79

When a company records a stock repurchase,it is tracking a shareholder's sale of shares to another investor.
BT: Comprehension

Question 80

A sole proprietorship is an unincorporated business owned by one person.
BT: Knowledge