Which of the following statements is NOT correct? A firm's preference shareholders:O a.Are treated equally as all other preference shareholders.O b. Are entitled to perpetual cash flows.O C. Are entitled to a fixed dividend when there is sufficient retained earnings.O d. Vote at the firm's annual general meeting.O e. Rank ahead of ordinary shareholders in the case of bankruptcy.Which of the following statements about Depreciation is NOT correct?Oa.The book (carrying) value of a fixed asset is equal to the historical cost minus accumulated depreciation.O b. Higher depreciation has the effect of reducing Net Income but increasing Cash Flow from Assets.For tax purposes, the depreciation calculation must exclude any residual or salvage value of the asset.O d. Depreciation is subtracted from Cash Flow From Assets because it is a cash flow related to Capital expendituree.If the depreciation method used for tax purposes is changed from diminishing value to straight line, so less depreciationoccurs this year and more occurs in later years, then this year's Cash Flow from Assets will decrease.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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?With regard to stock dividend, which of the following is true .Reduces a corporation's assets and stockholders' equity A .Does not affect total equity, but transfer amounts between the components of equity.B „The decision to declare a stock dividend resides with the shareholders .C Transfers a portion of equity from retained earnings to a cash reserve account.D
Common stockholders: a) have a residual claim on both income and assets. b) have a higher claim on assets than preferred stockholders c) are last in line in the event of bankruptcy d) Both A & B e) Both A & C f) Both B &C g) All of the above
Which of the following statements about preferred shares is inaccurate? Select one: a. Preferred shares carry credit ratings. b. In the event of liquidation of a firm’s assets, preferred shareholders are paid out before common shareholders. c. Preferred share dividends are always cumulative. d. Preferred shares are often callable and puttable. e. Preferred share dividend income from another Canadian corporation is tax-exempt.
Which of the following are correct statements concerning corporate dividends? a. Dividends are legal liability of a corporation to its shareholders b. Dividends paid by a corporation to another corporation receive preferential tax treatment (minimum 70% exclusion from taxable income) c. Dividends are generally paid to the shareholders before the payment of interests to the bondholders d. Dividends payments are considered tax deductible expense while interest payments are not
Which of the following statements related to dividends is incorrect? O Dividends must be paid in the period declared. O Before declaring a dividend, management must consider availability of funds to pay the dividend. O Distributions to owners must be in compliance with the state laws. O Dividends must be declared by the Board of Directors.
Why the maximization of shareholders wealth overrules the objective of maximizingearnings?b) How does being a limited partner in a business enterprise differ from being a stockholder,assuming the same percentage of ownership?c) If you are scheduled to receive a certain sum of money five years from now but wish tosell your contract for its present value, which type of compounding would you prefer tobe used in the calculation? Why?d) John Selvester is 47 years old and is presently experiencing the “good” life. As a result,he anticipates that he will increase his weight at a rate of 4 percent a year. At present heweighs 250 pounds. What will he weigh at age 60?e) Allen wishes to purchase an annuity contract that will pay him $8,000 a year for the restof his life. The State Life Insurance Company figures that his life expectancy is 25 years,based on its actuary tables. The company imputes a compound annual interest rate of 6percent in its annuity contracts. How much will Allen have to pay…
A major difference between common and preferred stock Seleccione una: a. is that common stockholder have voting rights and preferred stockholders do not. b. is In the case of liquidation after a bankruptcy, common stockholder will be paid before preferred stockholders. c. is that preferred stockholder have voting rights and common stockholders do not. O d. is that common stock have a fixed dividend and preferred stock does not pay a dividend.
Stock dividends and stock splits are similar in that both do not change total stockholders’ equity. (True/False) A company must accrue a liability for sick pay that accumulates but does not vest. (True/False) A company may exclude a short-term obligation from current liabilities if the firm can demonstrate an ability to complete a refinancing. (True/False) Federal income taxes should be included in an employer’s payroll tax expense. (True/False) Whether an employee earns $80,000 a year or $800,000 a year, all of the earnings will be subject to Medicare deductions. (True/False) To record compensated absences as a liability GAAP establishes four criteria. The employer needs to meet any two of these four criteria in order to recognize a liability for compensated absences. (True/False) Stock dividends and stock splits both cause the number of shares outstanding to increase and retained earnings to decrease. (True/False)
Which of the following statements is NOT correct about the rights granted to common stockholders? Group of answer choices a. Stockholders may transfer their right to vote to a second party by means of a proxy. b. Dividends due to common stockholders are cumulative. c. Common stockholders have the right to elect a firm's directors. d. In large, publicly traded firms, managers typically have some stock but their personal holdings are generally insufficient to win voting control.
Which of the following is a characteristic of common stock?a. The right to the residual income after creditors have been paidb. Limited liability in the case of the corporation going bankruptc. Voting rights to elect the board of directorsd. The right to maintain a proportionate share of ownership in the firm (when new shares are issued, stockholders have the first right of refusal)e. All of the above
16. Which of the following statements is NOT correct about the rights granted to common stockholders? a. Stockholders may transfer their right to vote to a second party by means of a proxy. b. Dividends due to common stockholders are cumulative. c. Common stockholders have the right to elect a firm's directors. d. In large, publicly traded firms, managers typically have some stock but their personal holdings are generally insufficient to win voting control.
Which of the following has no affect on the Accumulated Adjustments Account (AAA) and stock basis of a shareholder of an 5 Corporation? Ordinary Income. Cost Of Goods Sold. O Long-Term Capital Gain. Repayment of loan by the S Corporation made by a shareholder.

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