Question 1

A stock dividend:

Accepted Answer

A)  is the same thing as a stock split.
B)  will reduce shareholders' equity just like a cash dividend.
C)  will not change any of the accounts within shareholders' equity.
D)  will reduce retained earnings just like a cash dividend.E) A) and D)
F) A) and C)

Question 2

You form a partnership with your best friend.You have contributed 65% of the capital and can claim 65% of the net income.At the end of the first year,you discover that your partner has run up $40,000 in debt using the business' credit card.The maximum you could be liable for is:

Accepted Answer

A)  $0.
B)  $40,000.
C)  $20,000.
D)  $26,000.E) A) and C)
F) B) and C)

Question 3

Jackson and O'Neill open a partnership that produces gates.Jackson provides $30,000 of capital while O'Neill contributes $90,000 of capital; they agree to split net income by the same proportion.The partnership's net income is $80,000 for the first year.They did not draw any income out of the business or add any additional capital during the first year.At the end of the year,the partners' equity is:

Accepted Answer

A)  $70,000 for Jackson and $130,000 for O'Neill for a total of $200,000.
B)  $200,000 minus income tax expense for the partnership.
C)  $200,000 minus the income tax paid by each partner.
D)  $50,000 for Jackson and $150,000 for O'Neill for a total of $200,000. E) None of the above
F) A) and B)

Question 4

Current earnings:

Accepted Answer

A)  can predict future dividends and share prices.
B)  can predict future dividends,but not share prices.
C)  can predict share prices,but not future dividends.
D)  cannot predict future dividends or share prices.E) A) and B)
F) A) and C)

Question 5

Typically,all other things equal,a profitable company that pays relatively high dividends:

Accepted Answer

A)  is an attractive investment for those seeking growth.
B)  will reinvest less profit which can lead to smaller growth potential.
C)  will experience more growth in stock price over time.
D)  all of the answers are acceptable.E) B) and C)
F) All of the above

Exam 11: Shareholders Equity

Current earnings:

Correct Answer
verified

You form a partnership with your best friend.You have contributed 65% of the capital and can claim 65% of the net income.At the end of the first year,you discover that your partner has run up $40,000 in debt using the business' credit card.The maximum you could be liable for is:

Correct Answer
verified

A stock dividend:

Correct Answer
verified

Correct Answer
verified

Typically,all other things equal,a profitable company that pays relatively high dividends:

Correct Answer
verified

Exam 11: Shareholders Equity

Current earnings:

Correct AnswerverifiedShow Answer

You form a partnership with your best friend.You have contributed 65% of the capital and can claim 65% of the net income.At the end of the first year,you discover that your partner has run up $40,000 in debt using the business' credit card.The maximum you could be liable for is:

Correct AnswerverifiedShow Answer

A stock dividend:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Typically,all other things equal,a profitable company that pays relatively high dividends:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified