11. Dividend yield is defined as the market price per share of a company's stock divided by its earnings per share.
12. A debit balance in retained earnings is often referred to as a retained earnings deficit.
13. When a company declares cash dividends, retained earnings is reduced.
Multiple Choice Questions
14. 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
15. The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:
A. Preemptive right
B. Proxy right
C. Right to call
D. Financial leverage
E. Voting right
16. A proxy is:
A. A legal document that gives a designated agent of a stockholder the power to vote the stock.
B. A contractual commitment by an investor to purchase unissued shares of stock.
C. An amount of assets defined by state law that stockholders must invest and leave invested in a corporation.
D. The right of common stockholders to protect their proportionate interests in a corporation by having the first opportunity to purchase additional shares of common stock issued by the corporation.
E. An arbitrary amount assigned to no-par stock by the corporation's board of directors.
17. The total amount of stock that a corporation's charter allows it to issue is referred to as:
A. Issued stock
B. Outstanding stock
C. Common stock
D. Preferred stock
E. Authorized stock
18. Par value of a stock refers to the:
A. Issue price of the stock.
B. Value assigned to a share of stock by the corporate charter.
C. Market value of the stock on the date of the financial statements.
D. Maximum selling price of the stock.
E. Dividend value of the stock.
19. When all of the authorized shares have the same rights and characteristics, the stock is called:
A. Preferred stock
B. Common stock
C. Par value stock
D. Stated value stock
E. No-par value stock
20. An amount of assets defined by state law that stockholders must invest and leave invested in a corporation is called the:
A. Par value of preferred.
B. Minimum legal capital.
C. Premium capital.
D. Stated value.
E. Working capital.