Question : 75.              Double taxation a disadvantage of the corporate ownership structure.  : 1370047

 

 

75.              Double taxation is a disadvantage of the corporate ownership structure.  What does double taxation mean?

A)Corporate tax rates are double the tax rates of sole proprietorships and partnerships

B)Corporations are subject to both a tax on profits and on retained earnings

C)Corporate profits are taxed at both the corporate and individual level

D)Corporate profits are subject to both federal and state income taxes

 

 

76.              Which of the following is true about the characteristics of a corporation?

 

Liability of Owners

Life of Business

Mutual Agency

A)

Limited

Unlimited

No

B)

Unlimited

Limited

Yes

C)

Limited

Unlimited

Yes

D)

Unlimited

Unlimited

Yes

 

 

77.              Which of the following is true about the characteristics of a partnership?

 

Liability of Owners

Life of Business

Mutual Agency

A)

Limited

Unlimited

No

B)

Unlimited

Limited

Yes

C)

Limited

Unlimited

Yes

D)

Unlimited

Unlimited

Yes

 

78.              Which of the following is true about financial leverage?

A)Financial leverage boosts the rate of return for the creditors of the firm.

B)Financial leverage can increase the rate of return on owners’ equity when the rate of return on invested assets is greater than the interest rate paid to creditors.

C)Financial leverage is created when there is no debt and the rate of return is increased with an increase in sales.

D)Financial leverage increases sales by increasing the amount invested in plant and equipment rather than financial assets such as bonds and stock.

 

79.              Which of the following is NOT one of the four basic rights of a corporation’s common stockholders?

A)Stock appreciation rights.

B)The right to vote.

C)The right to dividends when declared by the board of directors.

D)The preemptive right.

 

80.              Which of the following is NOT a potential feature of preferred stock?

A)Cumulative preferred stock

B)Participating preferred stock

C)Redeemable preferred stock

D)Convertible preferred stock

E)All of the above could be a feature of preferred stock.

 

81.   On which of the following dates is no accounting entry made?

A)  Date of payment

B)  Date of record

C)  Date of declaration

D)  Entries are made on all three dates

 

82.   On which of the following are accounting entries made on both dates?

A) Date of record and date of payment

B)  Date of payment and ex-dividend date

C)  Date of declaration and date of payment

D)  Date of record and date of declaration

 

83.              Which of the following statements is true about the debt to equity ratio?

A)The greater the debt to equity ratio the smaller the opportunity to increase the return on equity of a firm through financial leverage.

B)The greater the debt to equity ratio the greater the chance the firm will not meet its debt obligations.

C)The size of a of a company’s debt to equity ratio is directly related to amount of a firm’s sales.

D)The lower the debt to equity ratio the higher the risk that financial leverage will have a negative impact on a firm’s return on equity.

 

 

84.              Which of the following balance sheet accounts describes the stockholders’ claims on the assets of a firm that have been created by the company’s operating profits?

A)Retained Earnings

B)Net Income

C)Contributed Capital

D)Paid-in-Capital in Excess of Par

 

85.              Which of the following statements is not true about the times-interest-earned ratio?

A)The greater the times interest earned the lower the risk of defaulting on the firm’s debt.

B)The greater the interest expense, the lower the firm’s times-interest-earned ratio.

C)The smaller the times-interest-earned the lower the financial risk of the company.

D)A high times-interest-earned and a high debt to equity ratio means the company is effectively using financial leverage.