True/ False questions 1) Dividends paid to stockholders are tax deductible on a corporations income Statement....

True/ False questions

1) Dividends paid to stockholders are tax deductible on a corporations income Statement.

2) Common stock in a corporation can be privately owned by private investors or publicly owned by public investors.

3) the number of outstanding shares of common stock is always greater than or equal to the number of authorized shares of common stock

4) Typically small corporations are publicly owned large corporations are privately or closely owned.

Solutions

Expert Solution

1) False.

Divided paid to stockholders is not a tax deductible expense. Divided is paid out of the profit remaining after all expenses (including tax) i.e. it is paid out of Profit After Tax (PAT).

2) True.

Common stock in a corporation can be privately owned by Private investors or publicly owned by public investors. Company can issue shares through preferential allotment to some private investors. It can issue shares to public at large through IPO (Initial Public Offer) or FPO (Further Public Offer).

3) False

The authorised shares are the maximum number of shares which a company can issue. Therefore the number of outstanding shares of common stock is always less than or equal to the number of authorized shares of the common stock.

4) False

Small corporations are owned by Private or less number of people therefore these are privately or closely owned.

Large corporatios are publicly owned.

jeff jeffy answered 1 year ago

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