Which of the following stages of equity financing would come last for most public companies?
Investment by the founders of the business.
Initial public offering.
Outside investment by “angel” investors and venture capital firms.
Investment by friends and family.
Declaring a cash dividend has what effect on total stockholders’ equity?
Cannot be determined from the given information.
No effect on total stockholders’ equity.
An increase in total stockholders’ equity.
A decrease in total stockholders’ equity.
The correct order from the largest number of shares to the smallest number of shares is:
Issued, outstanding, and authorized.
Outstanding, issued, and authorized.
Authorized, issued, and outstanding.
Issued, authorized, and outstanding.
When treasury stock is resold, total stockholders’ equity:
Increases.
Decreases.
Does not change.
The effect depends on the relationship between the purchase price and resale price.
What is the primary reason for declaring a stock split?
Increase the share price.
Lower the trading price of a stock into a more acceptable trading range.
Increase stockholders’ equity.
Decrease stockholders’ equity.
The advantages of a corporation compared to a sole proprietorship or partnership include:
Lower total taxes.
The ability of stockholders to make operating decisions for their company.
Limited liability.
Less paper work.
What is the effect of a stock dividend on total stockholders’ equity?
Stockholders’ equity increases.
Stockholders’ equity decreases.
Stockholders’ equity does not change.
The effect on stockholders’ equity depends on the size of the stock dividend.
Petite Fashions issued 500,000 of its 2 million shares of authorized common stock. At the end of the accounting period, 450,000 shares are outstanding. How many shares of treasury stock does Petite Fashions have?
1.5 million shares.
450,000 shares.
50,000 shares.
0 shares.
Cash dividends are based on the number of shares:
Authorized.
Issued.
Outstanding.
Authorized and issued.
Which of the following shows activity over a period of time?
Stockholders’ equity section in the balance sheet.
Statement of stockholders’ equity.
Both the stockholders’ equity section in the balance sheet and the statement of stockholders’ equity.
Neither the stockholders’ equity section in the balance sheet or the statement of stockholders’ equity.
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