978-0136115274 Chapter 8 Quiz Chapter 8

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CHAPTER 8 NAME ___________________________________

TEN-MINUTE QUIZ SECTION _____________ DATE____________

_____________________________________________________________________________

_____ 1. Shareholders’ equity is made up of:

a. Contributed capital and preferred stock

b. Assets and liabilities

c. Contributed capital and retained earnings

d. Common stock and capital stock

_____ 2. Common stockholders generally have which of the following rights?

a. Right to vote for members of the board of directors

b. Right to share in the corporation’s profits

c. Right to acquire more shares when the corporation issues new stock

d. All of the above

_____ 3. Preferred stock generally has a preference over common stock for:

a. Dividends

b. Voting

c. Buying more stock

d. All of the above

_____ 4. Shares of stock that are owned by shareholders rather than by the corporation are:

a. Authorized shares

b. Issued shares

c. Outstanding shares

d. Treasury shares

_____ 5. Anyone owning a corporation’s stock on the _______ date is entitled to receive

the dividend.

a. Declaration

b. Record

c. Payment

d. Issue

_____ 6. The purchase of treasury stock reduces the company’s assets (cash) and:

a. Reduces the company’s stockholders’ equity

b. Increases the company’s stockholders’ equity

c. Increases the company’s assets (investments)

d. None of the above

_____ 7. Stock dividends:

a. Increase the number of shares outstanding

b. Increase some shareholders’ percentage of ownership in the company

c. Reduce a company’s cash

d. Do not affect retained earnings

_____ 8. Which of the statements about a 2-for-1 stock split is true?

a. The number of shares will be cut in half.

b. The common stock account will double.

c. Total stockholders’ equity will increase.

d. The number of treasury shares will double.

_____ 9. Basic earnings per share is earnings divided by:

a. The ending number of shares issued

b. The weighted average number of shares issued

c. The ending number of shares outstanding

d. The weighted average number of shares outstanding

_____ 10. Return on equity is calculated as:

a. Net income (less preferred dividends) divided by average common

stockholders’ equity

b. Net income divided by preferred stockholders’ equity

c. Retained earnings divided by average common stockholders’ equity

d. Net income (less preferred dividends) divided by average preferred

stockholders’ equity

ANSWER KEY – CHAPTER 8 – TEN-MINUTE QUIZ