The costs of bringing a corporation into existence, including legal fees, promoter fees, and amounts paid to obtain a charter are called:
A. Minimum legal capital.
B. Stock subscriptions.
C. Organization Costs.
D. Cumulative costs.
E. Prepaid fees.
C. Organization Costs.
Buying stock in a corporation is attractive to investors because:
E. All of the above.
A proxy is:
A. A legal document that gives a disignated agent of a stockholder the power to vote the stock.
The board of directors of a corporation:
D. Are responsible for and have final authority for managing corporate activities.
The total amount of stock that a corporation's charter allows it to issue is referred to as:
D. Authorized stock.
Par value of a stock refers to the:
A. Value assigned to a share of stock by the corporate charter.
Stockholders' equity consists of:
B. Contributed capital and retained earnings.
A class of stock that does not have a par value, and can usuallybe issued at any price without creating a minimum legal captial deficiency, is called:
C. No-par stock.
Owners of preferred stock often do not have:
D. Voting rights.
Preferred stock on which the right to receive dividends it forfeited for any year that the dividends are not declared is referred to as:
E. Noncumulative prferred stock.
A company issued 7% preferred stock with a $100 par value. This means that:
B. The amount of the potential dividend is $7 per year per perferred share.
Retained earnings:
A. Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.
Prior period adjustments to financial statements can result from:
A. Using unacceptable accounting principles.
A premium on common stock:
A. Is the amount paid in excess of par by purchasers of newly issued stock.
The date a board of directors votes to pay a dividend is called the:
A. Date of declaration.
A corporation's distribution of additional shares of its own stock to its stockholders without the recipt of any payment in return is called a:
B. Stock dividend.
Corporations often buy back their own stock:
E. All of the above.
Stock that was reacquired and is still held by the issuing corporation is called:
A. Treasury stock.
Treasury stock is classified as:
B. A contra equity account.
The following data were reported by a corporation:
Authorized shares: 20,000
Issued Shares: 15,000
Treasury Shares: 3,000
The number of outstanding shares is:
B. 12,000.
Sinking fund bonds:
A. Required the issuer to set aside assets to retire the bonds at maturity.
Bonds that have an option exercisable by the issuer to retire them at a stated dollar amount prior to maturity are know as:
E. Callable bonds.
A bond traded at 102 1/2 means that:
B. The bond traded at $1,025 per $1,000 bond.
Secured bonds:
B. Have specific assets of the issuing company pledged as collateral.
An advantage of bond financing is:
E. All of the above.
A disadvantage of bonds is:
E. All of the above.
The party that has the right to exercise the call option on callable bonds is(are):
A. The bond issuer.
The contract rate of interest is also called the:
B. Each of A, B, and C.
Bonds can be issued:
E. All of the above.
When a bond sells at a premium:
A. The contract rate is above the market rate.
A bond sells at a discount when the:
C. Contract rate is below the market rate.
Amortizing a bond discount:
C. Allocates a part of the total discount to each interest period.
The Discount on Bond Payable account is:
B. A contra liablility.
A discount on bonds payable:
B. Occurs when a company issues bonds with a contract rate less than the market rate.
A company may not retire bonds by:
E. All of the above.
Bonds that give the issuer and option of retiring them before they mature are:
E. Callable bonds.
Bonds with a par value of less than $1,000 are known as:
A. Baby bonds.
To provide security to creditors and to reduct interest cost, bonds and notes payable can be secured by:
C. Morgages.
The Contract between the bond issuer and the bondholders, which identifies the rights and obligations of the parties, is called a(n):
A. Bond indenture.
A company must repay the bank $10,000 cash in 3 years for a loan it entered into. The lean is at 8% interest compounded annually. The persent value factor for 3 years at 8% is 0.7938. The percent value of the loan is:
