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Generally the major difference between preferred shares and common shares is a) there are no significant differences between preferred and common shares. b) common shares

  1. Generally the major difference between preferred shares and common shares is

a) there are no significant differences between preferred and common shares.

b) common shares have a priority claim over corporate assets.

c) preferred shares have voting rights.

d) preferred shares are restricted by the amount of dividends that can be paid out.

  1. In 2020, Bouchard Enterprises reported net income of $75,000 and declared a dividend of $40,000. The dividend is to be paid on February 1, 2021 to shareholders of record on January 15, 2021. The balance in the retained earnings account on January 1, 2020 was $140,000. At Bouchards year end on December 31, 2020 the company reported the following ending balance for retained earnings on the statement of changes in shareholders equity:

a) $115,000

b) $175,000

c) $215,000

d) $35,000

  1. Seaside Developments Inc. has $200,000 of no par value 4% cumulative preferred shares, and 12,000 shares of no par value common shares outstanding. In its first three years of operation, the company paid cash dividends as follows: Year 1: $8,000; Year 2: $18,000; and Year 3: $24,000. The amount of dividends received by the preferred shareholders in year 2 was

a) $12,000

b) $8,000

c) $18,000

d) $9,000

  1. In order to understand a companys business, an analyst must understand the corporations strategy. Which of the following is an example of a corporate strategy?

a) being a high-cost producer

b) being a low-volume producer

c) being a low-cost producer

d) following product simplification

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