Question

Font Paragraph Tultiple Choice Questions, Extra Credit 60 points) 51. The net assets of a corporation equal to: A) Contributed capital C) Shareholders' equity. B) D) Retained earning None of the abos 52. Characteristics of the corporate form that have led to the growth of this form of bu the following except A) Ease of raising capital B) Low governme C) Limited liability D) Ease of ownershi 53. Retained earnings represent A) Earned capital. C) Assets. B) D) Cash Net assets. 54. The two primary components of shareholders' equity are: A) Preferred stock and retained earnings. B) The par value of common stock plus retained earnings C) Paid-in capital and retained earnings. D) Preferred and common stock. 55. Unrealized pension cost is included among shareholders' equity as A) Future earnings B) An addition to paid C) A restriction of retained earnings. A contra account D) 56. Details of each class of stock must be reported: A) On the face of the balance sheet only. B) In disclosure notes only. C) On the face of the balance sheet or in disclosure notes D) On the face of the balance sheet and in disclosure notes 57. In terms of business volume, the dominant form of business organization is the A) Partnership B) Corporation C) Limited liability company D) Proprietorship 58. The corporate charter sometimes is known as (a) A) Articles of incorporation B) Statement of organiza C) By-laws D) Registration statement 59. The preemptive right refers to the shareholder's right to A) Maintain a proportional ownership interest in the corporation B) Vote for members of the board of directors C) Receive a share of dividends. D) Share in profits proportionally with all other stockholders 60. Common shareholders usually have all of the following rights except search

Answer 1

51. Option (C) is correct

When we deduct liabilities from the assets, we get net assets. This is also equal to shareholder's equity, as per the below accounting equation:

Assets = Liabilities + Shareholder's equity

Shareholder's equity = Assets - Liabilities

or

Shareholder's equity = Net assets

52. Complete question is not visible in the image.

53. Option (A) is correct

Retained earnings are the earnings that are not distributed to stockholders as dividends. They are the accumulated earnings for the period and belong to the stockholders.So, retained earnings are earned capital of shareholders.

54. Option (C) is correct

Two primary components of shareholder's equity are paid in capital and retained earnings.

55. Option (C) is correct

Unrealized pension cost is other comprehensive income for a company. It is not available for distribution to shareholders till it is realized. So, it is a restriction of retained earnings.

56. Option (D) is correct

57. Option (B) is correct

58. Option (A) is correct

59. Option (A) is correct

62. Option (D) is correct

Preferred stock has the preference related to the dividends and assets on liquidation of the company. If the company liquidates, preferred stockholders are given preference for distribution of assets before the common stockholders.

63. Option (B) is correct

Par value is recorded in common stock account. Any amount received in excess of par value is credited to additional paid in capital.

64. Option (D) is correct

Authorized common stock is the total number of shares that the company is authorized to issue during its lifetime. It cannot issue more than the authorized shares.

65. Option (A) is correct

66. Option (B) is correct

In a cumulative preferred stock, dividend gets accumulated if not paid. So if in any year, dividend is not paid then it will be recorded as a liability till it is paid in future years.

67. Option (D) is correct

68. Option (A) is correct

69. Option (D) is correct

Participating preferred shares may receive additional dividends beyond the stated amount as they are entitled to participate in the profits of the company after their regular dividend is paid.

70. Option (A) is correct