Authorized common stock refers to the total number of shares:


QUESTION 26 Authorized common stock refers to the total number of shares: Outstanding Issued Issued and outstanding That can

Answer

Answer : 26. Option – D, That can be issued Explanation : Authorized common stock refers to the total number of shares that can be issued by company in its whole life. 27. Option – C, Dividends are not tax deductible Explanation : One of the main disadvantage of equity financing is that the dividends are not tax deductible. 28. Option – A, Net income less dividends since the company first started Explanation : Retained earnings represent a company’s net income less dividends since the company first started. It represents accumulated earnings over the years. 29. Option – A, Explanation : Journal entry is-

Account Debit Credit
Cash A/c (26,000 shares x $12) $312,000
Common stock (26,000 shares x $1) $26,000
Additional Paid in capital (26,000 shares x $11) $286,000

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