AC/113 AC113 AC 113 UNIT 9 QUIZ

Question 1.

Question :

Assume that Corporation X has 20,000 shares of $10 par value cumulative 6% preferred stock and 5,000 shares of common stock outstanding. No dividends were paid in 2009 and 2010. In 2011, the board of directors declares dividends of $50,000. What is the total cash paid to the preferred stockholders in 2011?

Student Answer:

 $12,000

 $24,000

 $36,000

 Zero

Question 2.

Question :

Which of the following is FALSE?

Student Answer:

 Accounts payable always require payment of interest.

 Notes and bonds require interest to be paid periodically.

 Vendors and suppliers help to finance operations.

 Most businesses maintain a normal amount of accounts payable.

Question 3.

Question :

Stock dividends are:

Student Answer:

 distributions of common stock to holders of common stock

 distributions of cash or other assets to shareholders

 normally recorded at the par value of the stock issued

 required of companies periodically, according to their corporate charters

Question 4.

Question :

If the contract rate is lower than the market rate, the bonds will sell at __________.

Student Answer:

 a discount

 a premium

 face amount

 Cannot be determined from facts given

Question 5.

Question :

Mickey Mouse Co. announced a 2-for-1 stock split of its $20 par value common stock, which is currently trading for $60 per share. What is the new par value and the estimated market price of the stock after the split? What is the New Par Value and the Estimated market price of the stock?

Student Answer:

 $10, $30

 $20, $30

 $10, $60

 $40, $120