Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Characteristics of a Corporation

Financial Accounting

12. Stockholders' Equity

Characteristics of a Corporation

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Multiple Choice

Which of the following is a characteristic of common stock in a corporation?

It guarantees a fixed dividend payment each year.

It has priority over creditors in the event of liquidation.

It must be redeemed by the corporation at a set maturity date.

It typically carries voting rights for shareholders.

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Verified step by step guidance

Understand the nature of common stock: Common stock represents ownership in a corporation and typically comes with voting rights, allowing shareholders to participate in decisions such as electing the board of directors.

Analyze the incorrect options: Common stock does not guarantee fixed dividend payments, as dividends are typically variable and depend on the corporation's profitability and discretion of the board.

Evaluate liquidation priority: Common stockholders are last in line during liquidation, meaning creditors and preferred stockholders are paid first before any remaining assets are distributed to common stockholders.

Consider redemption and maturity: Common stock does not have a set maturity date and is not required to be redeemed by the corporation, unlike certain types of bonds or preferred stock.

Confirm the correct characteristic: Common stock typically carries voting rights, which is a key feature distinguishing it from other types of equity or debt instruments.