ACCT 2101 Chapter Notes - Chapter 11: Stock Split, Dividend Policy, Xavier'S Security Enforcers

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24 Dec 2017

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Corporations are created by applying to a state government. Residual claim: receive a proportional share of the remaining assets when the company liquidates. Authorized number of shares: max number of shares a corporation can issue as outlined in their charter. Issued shares: stocks that have been sold to the public. Treasury stock: shares bought back from the public by the company. Outstanding shares: shares actually owned by public at any particular moment. Outstanding shares = issued shares - treasury stock. Earnings per share = net income / weighted average number of common shares outstanding. Doesn"t reflect how a company will perform in the future. Dividend paid per share = dividends paid / shares outstanding. No relationship to market value of a stock. Purpose of par value is to limit how much owners could take out of the company so as to protect creditors. Legal capital: permanent amount of capital that must remain.

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QUESTION 1

Probably the most basic right of a stockholder is the rightto:

	A.	receive an assured dividend each year.
	B.	serve as a director of the organization.
	C.	vote at stockholders' meetings.
	D.	receive at least his or her initial investment uponliquidation

The three significant cash dividend dates are the date ofdeclaration, date of record, and date of payment.

True

False

QUESTION 3

The price-earnings ratio is computed by dividing the currentmarket price per share of common stock by earnings per share.

True

False

The three significant cash dividend dates are (in order) thedates of:

	A.	declaration, distribution, and payment.
	B.	record, distribution, and payment.
	C.	declaration, record, and distribution.
	D.	declaration, record, and payment

The date of record follows the date of the declaration of adividend.

True

False

The amount of prior unpaid dividends is only important if thepreferred stock is:

	A.	noncumulative and convertible.
	B.	noncumulative and callable.
	C.	noncumulative.
	D.	cumulative

The number of outstanding shares of stock is the:

	A.	number authorized but not yet issued.
	B.	number issued to the original incorporates.
	C.	number issued and currently held by stockholders.
	D.	total number issued.

Treasury stock is stock that:

	A.	is apportioned to cover special projects such as theconstruction of a new building.
	B.	has never been issued.
	C.	has been issued but was reacquired by the corporation.
	D.	must be offered to existing stockholders first in amountsproportional to their shareholdings of the issuer's stock.

ACCT 2101 Chapter Notes - Chapter 11: Stock Split, Dividend Policy, Xavier'S Security Enforcers

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