12 Questions
What is a primary source of shareholders' equity?
Income retained by the corporation
How is shareholders' equity generally classified?
Appropriated capital and retained earnings
What is the least appropriate basis for recording a transaction when a corporation issues its capital stock in payment for services?
Total assets of the corporation
When are direct costs incurred to sell stock accounted for as an expense?
During the period in which the stock is issued
What will create a 'secret reserve' in accounting?
Inadequate depreciation charged to income
What is stock with a fixed per-share amount printed on each stock certificate called?
Stated-value stock
The pre-emptive right of ordinary shareholders is the right to:
Share proportionately in any new issues of stock of the same class
The pre-emptive right enables a stockholder to:
Share proportionately in any new issues of stock of the same class
In a corporate form of business organization, legal capital is best defined as:
The par value of all capital stock issued
Which one of these has the residual interest in a corporation?
Ordinary shareholders
Shareholders of a business enterprise are said to be the residual owners. The term residual owner means that shareholders:
Have the last claim on the corporation's assets after all other obligations have been met
Which of the following is not a characteristic of preference shareholders?
They have a fixed rate of return on their investment
Test your knowledge on residual interest in corporations and the pre-emptive rights of ordinary shareholders with this quiz. Questions include identifying who the residual interest belongs to and understanding the pre-emptive right of ordinary shareholders.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
