ACC 291 Week 4 Practice Quiz

ACC 291 Week 4 Practice Quiz

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 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%
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