Common Stock


When the effective-interest method of bond discount amortization is used

A.  the applicable interest rate used to compute interest expense is the prevailing market interest rate on the date of each interest payment date

B.  the carrying value of the bonds will decrease each period

C.  interest expense will not be a constant dollar amount over the life of the bond

D.  interest paid to bondholders will be a function of the effective-interest rate on the date the bonds were issued


If a corporation has only one class of stock, it is referred to as

A.  classless stock

B.  preferred stock

C.  solitary stock

D.  common stock


Capital stock to which the charter has assigned a value per share is called

A.  par value stock

B.  no-par value stock

C.  stated value stock

D.  assigned value stock


ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2011. What is the annual dividend on the preferred stock?

A.  $50 per share

B.  $5,000 in total

C.  $500 in total

D.  $.50 per share

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