Question 1

The Securities and Exchange Commission does not allow firms to report redeemable preferred stock in the stockholders' equity section of the balance sheet.Why do you suppose it imposes this restriction?

Accepted Answer

The answer of The Securities and Exchange Commission does not...

Question 2

Match between columns
                        Premises: Date when the cash dividend is distributed to stockholders.
The distribution of cash to corporate shareholders.
Program that allows stockholders to reinvest their dividend in stock rather than receive the cash dividend.
Stockholders must be registered in the stock transfer book on this date in order to receive a declared dividend.
The last day to buy stock and receive a declared dividend.
The corporation exchanges its old shares for a larger number of new shares.
A distribution of a company's shares to existing stockholders.
The amount of preferred dividends that have not been paid in full.
Payment of noncash assets to stockholders.
The day the corporation is legally obligated to pay a dividend.

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The Answer of Stock dividend and Property dividend and Dividends is...

Question 3

Does the term "preferred" mean that preferred stock is a better investment than common stock?

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The answer of Does the term "preferred" mean that preferred...

Question 4

What is a DRIP? How can it be advantageous to both a corporation and its stockholders?

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The answer of What is a DRIP? How can it...

Question 5

What does the combination of the debt to equity ratio and the times interest earned ratio tell analyst.

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The answer of What does the combination of the debt...

Question 6

Explain the relationship between a stock's par value and its market value.

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The answer of Explain the relationship between a stock's par...

Question 7

Explain why the combination of mutual agency and unlimited liability create a great deal of risk for partnerships.

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Question 8

Merchants Corporation has 30,000 shares of 6.5%,$100 par value cumulative preferred stock and 200,000 shares of $10 par value common stock issued and outstanding.There are two years of dividends in arrears on the preferred stock.Determine the amount of dividends each class of stock will receive in total and per share assuming the company declares a $935,000 dividend.

Accepted Answer

The answer of Merchants Corporation has 30,000 shares of 6.5%,$100...

Question 9

Match between columns
                        Premises: Partners are responsible for their own wrongful acts but not the wrongful acts of other partners.
Created as part of the Internal Revenue Code
Business Income taxed only once.
Can have no more 75 members
Limited partners can not manage the business
All owners have full ownership rights and number of owners is not limited.

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The Answer of Limited Liability Company and Limited Liability Partnership is...

Question 10

Match between columns
                        Premises: Preferred stock that allows unpaid dividend to accumulate.
The basic ownership unit of a corporation.
An ownership interest that gives the stockholder preferences as to dividends and liquidation.
The corporation own issued stock that it has repurchased in the secondary market.
Preferred stock that gives the issuing corporation the right to buy the stock back from the stockholders at a predetermined price.
Shares repurchased by the corporation that it will never reissue.
Stock that does not have a minimum price assigned to each share of stock.
Preferred stock that gives its owner the right to exchange the stock for cash.
Preferred stock that allows its holder to receive dividends in excess of the stated dividend rate.
Preferred stock that gives the holder of the shares the right to exchange the stock for other forms of capital (typically common stock).

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The Answer of Retired stock and Redeemable preferred stock and is...

Question 11

Larry,Mo,and Curley are partners in Stooges Company with the following balances in their capital balances.
Larry $100,000 Mo $70,000 Curley $25,000
Their partnership agreement has the following provision for the division of income and losses.
Each partner to receive 10% of their capital balance.
Curley is to receive a salary of $30,000
Any residual is to be divided on a 5:3:2 basis
If Stooges Company generated $20,000 of net income how will it be divided among the partners?

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The answer of Larry,Mo,and Curley are partners in Stooges Company...

Question 12

Which of the following statements is not true about the times-interest-earned ratio?

Accepted Answer

The statement "The smaller the times-interest-earned the lower the financial risk of the company" is not true. The times-interest-earned ratio measures a company's ability to meet its interest payments, and a smaller ratio indicates higher financial risk as the company has a lower cushion to cover interest payments. The other statements are true.

Question 13

Chuck,Ron,and Wayne are partners in the Zieman Dance Hall Company with the following balances in their capital balances.
Chuck $120,000 Ron $70,000 Wayne $40,000
Their partnership agreement has the following provision for the division of income and losses.
Each partner to receive 10% of their capital balance.
Wayne has a salary allowance of $50,000
Any residual is to be divided on a 5:3:2 basis
Calculate how the following income and loss amounts would be divided among the parters:
A.$70,000 of net income
B.$15,000 net loss

Accepted Answer

The answer of Chuck,Ron,and Wayne are partners in the Zieman...

Question 14

Match between columns
                        Premises: A financing strategy that uses debt to increase the rate of return on owners' investment.
A measure of a firm's ability to service its debt.
The total number of shares the state will allow a corporation to sell.
The portion of stockholders' equity required by the state to be retained for the protection of the corporation's creditors.
An arbitrary value assigned to shares of capital stock that is approved by the state in which the business is incorporated.
The chance that a company will fail because it defaults on its debt.
A means of raising cash or other assets in exchange for an ownership interest in a company.
The number of shares sold to stockholders.
A right of common stockholders that allows them to maintain their percentage ownership interest in the corporation when new shares of stock are issued.
When a firm obtains funds (cash) in exchange for a liability to repay the borrowed funds.
A measure of the performance of the owners' investment.
The number of shares held outside the corporation.

Accepted Answer

The Answer of Financial risk and Equity financing and Legal is...

Question 15

A recent article in a business publication described a leading cosmetics company as being in financial difficulty because it was "highly leveraged".What does "highly leveraged" mean? Can it ever be good to be "highly leveraged"? Explain.

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The answer of A recent article in a business publication...

Question 16

What is par value? Why do corporations usually select a low par value?

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The answer of What is par value? Why do corporations...

Question 17

Tescott Corporation is authorized to issue 500,000 shares of $1 common stock and 50,000 shares of preferred stock.The preferred stock has a $20 par value,and a 10% dividend,is cumulative.Tescott has 100,000 shares of common stock issued and outstanding and 6,000 shares of preferred stock issued and 5,000 outstanding.The preferred stock is two years in arrears when the board of directors declares a $300,000 dividend.How much of the dividend goes to common stockholders and how much to preferred stockholders?

Accepted Answer

The answer of Tescott Corporation is authorized to issue 500,000...

Question 18

Marisa,Andrew and David are partners in the MAD Company.Their average capital balances for the current year were $48,000,$63,000 and $54,000,respectively.Their partnership income sharing agreement includes the following provisions: (1)A salary allowance of $25,000 for Marisa and $20,000 for David,(2)a 10% return on average capital for all partners,and (3)any remainder divided equally.Determine the increase or decrease in each of the partners' capital accounts assuming (
A)net income is $66,000 and (b)net loss is $4,500.

Accepted Answer

The answer of Marisa,Andrew and David are partners in the...

Quiz 13: Planning Equity Financing

The Securities and Exchange Commission does not allow firms to report redeemable preferred stock in the stockholders' equity section of the balance sheet.Why do you suppose it imposes this restriction?

Match the following terms with the descriptions below.

Does the term "preferred" mean that preferred stock is a better investment than common stock?

What is a DRIP? How can it be advantageous to both a corporation and its stockholders?

What does the combination of the debt to equity ratio and the times interest earned ratio tell analyst.

Explain the relationship between a stock's par value and its market value.

Explain why the combination of mutual agency and unlimited liability create a great deal of risk for partnerships.

Match the following types of ownership structures with the descriptions listed below.

Match the following terms with the descriptions below.

Which of the following statements is not true about the times-interest-earned ratio?

Match the following terms with the descriptions below.

A recent article in a business publication described a leading cosmetics company as being in financial difficulty because it was "highly leveraged".What does "highly leveraged" mean? Can it ever be good to be "highly leveraged"? Explain.

What is par value? Why do corporations usually select a low par value?