#1 The stockholders of a corporation have unlimited liability. True or False #5 Which of the following is a disadvantage of the corporate business form? No income taxes Government regulation Easy acquisition of capital Continuous life #10 If a corporation issues 1,000 shares of $3 par common stock for $7 a share, how much is the legal capital? $0 $7,000 $3,000 $4,000 #20 For what reason might a company acquire treasury stock? To reissue the shares to officers and employees under bonus and stock compensation plans To increase the number of shares of stock outstanding To increase profit To signal to the stock market that management believes the stock is overpriced #30 Which one of the following is not a right of preferred stockholders? Priority to dividends and assets in liquidation. Priority in relation to dividends Priority voting rights Priority to the assets in the event of liquidation #59 If everything else is held constant, what will cause earnings per share to increase? The payment of a cash dividend to preferred stockholders The payment of a cash dividend to common stockholders The issuance of new shares common stock The purchase of treasury stock #56 Which of the following does not increase the return on common stockholders' equity? An increase in the return on assets ratio An increase in the company's stock price An increase in the company's net income An increase in the use of debt financing #60When a stock dividend is declared, which of the following accounts is debited? Common Stock Dividends Distributable Common Stock Paid-in Capital in Excess of Par Value Stock Dividends #55 Jaylo Inc. had net income of $500,000, net sales of $10,000,000 and paid cash dividends of $200,000 to the common stockholders. How much is Jaylo's payout ratio? 2% 40% 20% 4% #54 Consider the following data for a corporation: Net income $800,000 Preferred stock dividends $50,000 Market price per share of stock $25 Average common stockholders' equity $4,000,000 Cash dividends declared on common stock What is the return on common stockholders' equity? 18.75% 20.00% 19.50% 21.25% $20,000