MCQ Which of the following statements is true? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer a Shareholders have limited liability, which means that they are not usually held liable for the corporation's debts. b The issue of common shares impacts both share capital and retained earnings. Secondary trading of a company's shares do not have a direct impact on the company's cash flows. d When preferred shares are non- cumulative, preferred dividends not declared in a given period are called dividends in arrears. Which statement is incorrect? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a A common share receives a fixed dividend rate set in the share contract. b b A shareholder owning common shares has the right to vote in the election of the Board of Directors. An initial public offering, also known as an IPO, occurs the first time a corporation sells shares to the public. d Share capital is the amount paid into the corporation by shareholders in exchange for shares of ownership. The following statements are incorrect except: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Dividends in arrears are liabilities of the corporation. b Net earnings of a corporation should be closed to retained earnings and net losses should be closed to share capital accounts. Earnings per share is calculated by dividing the net earnings available to common shareholder by the number of common shares issued at year end. Preferred share dividends in arrears must be paid before d dividends on common shares can be paid if the preferred share has a cumulative dividend preference. A company has been authorized to issue a maximum of 300,000 common shares but has only issued 275,000 common shares to date. The Board of Directors declares a dividend of 50 cents per share. What is the total amount of dividend that will be paid? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $137,500 b $150,000 $275,000 d $300,000 MCQ ABC Company has 150,000 cumulative preferred shares outstanding and 250,000 common shares outstanding. The preferred shares are entitled to a dividend of $1 per share, but the company has not paid any dividends for the last two years. The Board of Directors declares total dividends of $750,000 this year. What amount is paid to the preferred shareholders? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a a $150,000 b $300,000 $450,000 d $700,000