91. Which of the following is
not
a reason why a corporation may choose to not pay dividends?
A. The board and management prefer to reinvest all net income for future growth.
B. The corporation does not have adequate cash.
C. The corporation does not have adequate retained earnings.
D. All of these are valid reasons to not pay dividends.
92. Which of the following would not be a reason for the market price of Carlyle Corporation to increase?
A. Carlyle Corp. has had good earnings in the present period.
B. A sustained increase in key interest rates.
C. The general condition and future outlook of the economy is good.
D. Investors believe Carlyle Corp. will do well in the future.
93. The price-earnings ratio is calculated as:
A. The market price of a share of stock divided by the earnings per share.
B. The interest rate on borrowed money divided by the current prime rate.
C. The price of a company's products as compared to its net income.
D. The market value of a company’s stock divided by average earnings over the past three years.
94. Indicate whether each of the following statements is true or false.
_____ a) Double taxation refers to the fact that both a partnership and its partners must pay income tax on the earnings of the partnership.
_____ b) A sole proprietorship is an accounting entity separate from its owner.
_____ c) Limited liability is a benefit to both corporations and partnerships, but not to sole proprietorships.
_____ d) Unlike a partnership, a corporation is not terminated when a major stockholder withdraws his or her investment.
_____ e) Sole proprietorships are, generally, subject to fewer governmental regulations than corporations.
95. Indicate whether each of the following statements about stockholders' equity is true or false.
_____ a) Preferred stockholders generally have no preference to assets when the company is liquidated.
_____ b) Preferred stockholders generally have a preference to dividends.
_____ c) Preferred stock carries voting rights that gives the preferred stockholders greater power in the corporation's decision making process than common stockholders have.
_____ d) Preferred stockholders generally receive a set or fixed amount of dividends.
_____ e) If a corporation has issued non-cumulative preferred stock, common stockholders may receive greater dividends than if the corporation has issued cumulative preferred stock.
96. Indicate whether each of the following statements about treasury stock is true or false.
_____ a) One reason for a corporation to buy its own stock is to boost its net income when treasury stock is reissued for a higher price.
_____ b) Corporations may buy back their own stock (treasury stock) to avoid hostile takeovers.
_____ c) Purchasing treasury stock reduces the number of issued shares.
_____ d) The treasury stock account is classified as a negative equity account.
_____ e) If treasury stock is reissued for an amount lower than its purchase price, retained earnings is increased.
97. Seymore Corp. has the following number of shares of stock outstanding:
98. The following items appeared on the financial statements of Monroe, Inc. on December 31, 2015:
99. Indicate whether each of the following statements about stockholders' equity is true or false.
_____ a) The balance in the treasury stock account increases total stockholders' equity.
_____ b) A company may acquire treasury stock in an effort to increase the market price of its stock.
_____ c) The declaration and distribution of a stock dividend reduces retained earnings.
_____ d) A 2-for-1 stock split probably will double the monetary value of each investor's holdings on the date the split takes effect.
_____ e) If treasury stock that had been acquired by a company for $50 per share is resold for $40 per share, total assets and stockholders' equity will decrease.
100. Indicate whether each of the following statements is true or false.
_____ a) An appropriation of retained earnings limits the amount available for dividends.
_____ b) Appropriating retained earnings is considered an asset exchange transaction.
_____ c) An appropriation is recorded as a debit to the appropriated retained earnings account and a credit to retained earnings.
_____ d) One reason for an appropriation of retained earnings is that there may be restrictive covenants in credit agreements.
_____ e) An appropriation has no effect on the accounting equation.