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 statements is correct regarding common stock?

Common stockholders have priority over creditors in the event of liquidation.

Common stockholders have voting rights in the corporation.

Common stock cannot be issued at a price above its par value.

Common stockholders are guaranteed fixed dividends each year.

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Verified step by step guidance

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

Analyze the statement 'Common stockholders have priority over creditors in the event of liquidation': This is incorrect because creditors and preferred stockholders have priority over common stockholders during liquidation. Common stockholders are last in line to receive any remaining assets.

Evaluate the statement 'Common stockholders have voting rights in the corporation': This is correct. Common stockholders generally have voting rights, which is one of the key features distinguishing common stock from preferred stock.

Examine the statement 'Common stock cannot be issued at a price above its par value': This is incorrect. Common stock can be issued at a price above its par value, and the excess amount is recorded as additional paid-in capital in the equity section of the balance sheet.

Assess the statement 'Common stockholders are guaranteed fixed dividends each year': This is incorrect. Unlike preferred stockholders, common stockholders are not guaranteed fixed dividends. Dividends for common stockholders are typically variable and depend on the company's profitability and dividend policy.