21. The total amount of cash and other assets received by a corporation from its stockholders in exchange for common stock is:
A. Always equal to its par value.
B. Always equal to its stated value.
C. Referred to as contributed capital.
D. Referred to as retained earnings.
E. Always below its stated value.
22. Stated value of no-par stock is:
A. Another name for redemption value.
B. An amount assigned to par value stock by the state of incorporation.
C. The market value of the stock on the date of issuance.
D. The difference between the par value of stock and the amount below or above par value contributed by the stockholder.
E. An amount assigned to no-par stock by the corporation's board of directors.
23. Stockholders' equity consists of:
A. Long-term assets.
B. Contributed capital and retained earnings.
C. Contributed capital and par value.
D. Retained earnings and cash.
E. Premiums and discounts.
24. A corporation's minimum legal capital is often defined to be the total par value of the shares:
A. Issued
B. Authorized
C. Subscribed
D. Outstanding
E. In treasury
25. Owners of preferred stock often do not have:
A. Ownership rights to assets of the corporation.
B. Voting rights.
C. Preference to dividends.
D. The right to sell their stock on the open market.
E. Preference to assets at liquidation.
26. Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:
A. Participating preferred stock
B. Callable preferred stock
C. Cumulative preferred stock
D. Convertible preferred stock
E. Noncumulative preferred stock
27. A dividend preference for preferred stock means that:
A. Preferred stockholders receive their dividends before common shareholders.
B. Preferred shareholders are guaranteed dividends.
C. Dividends are paid quarterly.
D. Preferred stockholders prefer dividends more than common stockholders.
E. Dividends must be declared on preferred stock.
28. A company issued 7% preferred stock with a $100 par value. This means that:
A. Preferred shareholders have a guaranteed dividend.
B. The amount of the potential dividend is $7 per year per preferred share.
C. Preferred shareholders are entitled to 7% of the annual income.
D. The market price per share will approximate $100 per share.
E. Only 7% of the total contributed capital can be preferred stock.
29. Prior period adjustments to financial statements can result from:
A. Changes in estimates.
B. Using unacceptable accounting principles.
C. Discontinued operations.
D. Changes in tax law.
E. Extraordinary items.
30. Prior period adjustments are reported in the:
A. Income statement.
B. Balance sheet.
C. Statement of retained earnings.
D. Statement of cash flows.
E. Notes to the financial statements.