10.2 Describe the two sources of shareholders' equity and the classes of shares
1) Shareholders' equity consists of contributed capital and paid-in capital.
2) Retained earnings represent internally generated capital.
3) There are three basic rights a shareholder may have.
4) Preferred shares are considered a voting "class" of shares.
5) Earnings that a shareholder receives from a corporation is an example of which shareholder right?
A) Vote
B) Dividends
C) Liquidation
D) Preemption
E) Retained earnings
6) If you own 500 shares (2% of a corporation's stock) and the corporation issues 15,000 new shares, how many of the new shares can you purchase under preemptive right?
A) 500
B) 300
C) 800
D) 0
E) 100
7) If you own 500 shares (2% of a corporation's stock) and the corporation issues 15,000 new shares, how many total shares will you have after exercising your preemptive rights?
A) 500
B) 300
C) 800
D) 0
E) 600
8) Which of the following would NOT be share capital?
A) Capital earned by profitable operations
B) Contributed capital
C) Amounts received from shareholders
D) Common shares
E) Externally generated capital resulting from transactions with outsiders
9) What is the minimum number of voting class shares that a company must have?
10) When shareholders participate in management, they are demonstrating which shareholder right?