accounting questions 495183

Eye Openers 1. Describe the stockholders’ liability to creditors of a corporation. 2. Why are most large businesses organized as corporations? 3. Of two corporations organized at approximately the same time and engaged in competing businesses, one issued $100 par common stock, and the other issued $0.01 par common stock. Do the par designations provide any indication as to which stock is preferable as an investment? Explain. 4. A stockbroker advises a client to “buy preferred stock. . . . With that type of stock, . . . [you] will never have to worry about losing the dividends.” Is the broker right? 5. What are some of the factors that influence the market price of a corporation’s stock? 6. When a corporation issues stock at a premium, is the premium income? Explain. 7. (a) What are the three conditions for the declaration and payment of a cash dividend? (b) The dates in connection with the declaration of a cash dividend are February 16, March 18, and April 17. Identify each date. 8. A corporation with both preferred stock and common stock outstanding has a substantial credit balance in its retained earnings account at the beginning of the current fiscal year. Although net income for the current year is sufficient to pay the preferred dividend of $125,000 each quarter and a common dividend of $300,000 each quarter, the board of directors declares dividends only on the preferred stock. Suggest possible reasons for passing the dividends on the common stock. 9. An owner of 500shares of Micro shop Company common stock receives a stock dividend of 5 shares. (a) What is the effect of the stock dividend on the stockholder’s proportionate interest (equity) in the corporation? (b) How does the total equity of 505 shares compare with the total equity of 500 shares before the stock dividend? 10. a. Where should a declared but unpaid cash dividend be reported on the balance sheet? b. Where should a declared but unissued stock dividend be reported on the balance sheet? 11. a….