In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

minimum legal capital.

Achieving an increased rate of return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called:

financial leverage.

Preferred stock that the issuing corporation has the option to retire by paying a specified amount to the preferred stockholders is called:

callable preferred stock.

Retained earnings:

generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

common stock's market value.

Recording of a stock dividend results in a liability being recorded.

False

A proxy is:

a document that delegates a stockholder's voting rights to an agent.

A dividend preference for preferred stock means that:

preferred stockholders are allocated their dividends before dividends are allocated to common shareholders.

Preferred stock that confers rights to prior periods' unpaid dividends even if they were not declared is called:

cumulative preferred stock.

Changes in accounting estimates are:

accounted for in current and future periods.

A stock dividend does not reduce a corporation's assets or its stockholders' equity.

True

Par value of a stock refers to the:

value assigned per share by the corporate charter.

Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

noncumulative preferred stock.

Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:

participating preferred stock.

Changes in retained earnings are commonly reported in the:

statement of stockholders' equity.

Which of the following is true of a stock dividend?

Does not affect total equity, but transfer amounts between the components of equity

Stated value of no-par stock is:

an amount assigned to no-par stock by the corporation's board of directors.

A class of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called:

no-par stock.

Rights to purchase common stock at a fixed price over a specified period are:

stock options.

A stock dividend decreases the market price of the company's stock.

True

The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the:

dividend yield.

The right of common shareholders to purchase their proportional share of any common stock later issued by the corporation is called a:

preemptive right.

When a corporation has only one class of stock, the stock is called:

common stock.

Prior period adjustments are reported in the:

statement of retained earnings.

A corporation's minimum legal capital is established by recording the par or stated value of the number of shares:

issued.

Preferred stock that the issuing corporation has the option to retire by paying a specified amount to the preferred stockholders is called:

callable preferred stock.

The dividend yield is computed by dividing:

annual cash dividends per share by the market value per share.

A stock split increases total stockholders' equity.

False

The board of directors of a corporation:

are responsible for and have final authority for managing corporate activities.

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

referred to as paid-in capital.

Companies report the cost of stock options in the:

income statement.

Stocks that pay relatively large cash dividends on a regular basis are called:

income stocks.

All stock dividends are recorded at par value so there would never be a credit to the paid-in capital in excess of par value account.

False

The costs of bringing a corporation into existence, including legal fees, promoter fees, and amounts paid to obtain a charter are called:

organization expenses.

The price-earnings ratio is calculated by dividing:

market value per share by earnings per share.

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

...

Prior period adjustments to financial statements can result from:

unacceptable accounting practices.

A stock dividend is a distribution of corporate assets that returns part of the original investment to shareholders.

False