1. Question : Which stock offers shareholders preference in receiving dividends?
ID: 2370347 • Letter: 1
Question
1. Question :
Which stock offers shareholders preference in receiving dividends?
CORRECT preferred stock
2. Question :
Paid-in capital includes ________
CORRECT capital stock and additional paid-in capital
3. Question :
Stock that has been sold and then repurchased by the issuing corporation is called ________ stock.
CORRECT treasury
4. Question :
The owners of common stock do NOT have the specific right to ________.
CORRECT receive dividends automatically each year
5. Question :
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 authorized?
CORRECT 1,500,000 shares
6. Question :
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?
CORRECT 195,000 shares
7. Question :
Cartier, Inc.'s corporate charter authorizes it to sell 1 million shares of $0.50 par value common stock. As of December 31, 2011, the company had sold 500,000 shares for $4 each. Cartier has 20,000 shares of treasury stock that cost $100,000. On the December 31, 2011 balance sheet, the number of shares issued is ________ shares.
CORRECT 500,000
8. Question : Distributions of a corporation's earnings to its shareholders are called ________.
CORRECT dividends
9. Question :
The date of payment is the date ________.
CORRECT when cash is actually paid to the shareholders
10. Question :
Noncumulative preferred stock means that ________.
CORRECT the board of directors has the option to decide whether past unpaid dividends will be paid to preferred shareholders
11. Question :
Dividends ________.
CORRECT are the distribution of profits
12. Question :
When a company buys shares of its own stock and holds them as treasury stock, ________.
CORRECT its earnings per share will increase
13. Question :
A corporation's distribution of new shares of stock to the corporation's current shareholders is called a ________.
CORRECT stock dividend
14. Question :
Retained earnings is the ________.
CORRECT beginning retained earnings plus net income minus dividends
15. Question :
Team Shirts issued 20,000 shares of stock for $20 per share. This transaction increased Cash $400,000 and increased ________ $400,000.
CORRECT Paid-in capital
16. Question :
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?
CORRECT $101,700
17. Question :
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$370,000
Retained earnings, December 31, 2010$280,000
Retained earnings, December 31, 2011$360,000
Total shareholders' equity at December 31, 2011$725,000
Total liabilities at December 31, 2010$105,000
Total liabilities at December 31, 2011$385,000
Total assets at December 31, 2010$750,000
What was return on equity for the year ended December 31, 2011?
CORRECT 54.0%
18. Question :
Earnings per share is ________.
CORRECT net income, minus preferred dividends, divided by the weighted average number of common shares outstanding
19. Question :
A measure of how well a company produces income with the amount of investment that common shareholders have made in the company is the ________
CORRECT return on equity
20. Question :
Risks associated with owning an investment in a company's stock include the risk that ________.
Explanation / Answer
Preferred stock(also calledpreferred shares,preference sharesor simplypreferreds) is an equity security which may have any combination of features not possessed by common stock including properties of both an equity and a debt instruments, and is generally considered a hybrid instrument. Preferreds are senior (i.e. higher ranking) tocommon stock, but subordinate tobondsin terms of claim (or rights to their share of the assets of the company).[1]
Preferred stock usually carries no voting rights,[2]but may carry adividendand may have priority overcommon stockin the payment of dividends and uponliquidation. Terms of the preferred stock are stated in a "Certificate of Designation".
Similar to bonds, preferred stocks are rated by the major credit-rating companies. The rating for preferreds is generally lower, since preferred dividends do not carry the same guarantees as interest payments from bonds and they are junior to all creditors.[3]
Preferred stock is a special class of shares which may have any combination of features not possessed by common stock. The following features are usually associated with preferred stock:[4]
In general, preferreds have preference to dividends payments. A preference does not assure the payment of dividends, but the company must pay the stated dividend rate before paying dividends on common stock.[4]
Preferred stock may becumulativeornoncumulative. A cumulative preferred requires that if a company fails to pay a dividend (or any amount) below the stated rate, it must make up for it at a later time. Dividends accumulate with each passed dividend period (which may be quarterly, semi-annually or annually). When a dividend is not paid in time, it has "passed"; all passed dividends on a cumulative stock make up a dividend inarrears. A stock without this feature is known as a noncumulative, orstraight,[5]preferred stock; any dividends passed are lost if not declared
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