Which of the Following Statements Is True of the Common

question 27

Multiple Choice

Which of the following statements is true of the common stockholders' right to a residual claim on assets?

• A) A firm must pay any back taxes, legal expenses, wages owed to workers, and debts owed to creditors before the owners get anything.
• B) If a corporation issues new stock, existing stockholders can purchase new shares in proportion to their ownership before the stock is offered to the other investors.
• C) If a firm skips a stockholder's dividend in one period, the amount it must pay the next period is equal to the dividend for that period plus the amount of the dividend it skipped in the previous period.
• D) A firm has a legal obligation to pay interest on bonds-and to pay the bondholder the par value of the bond when it matures.

---

Definitions:

Creditors

Individuals or entities that a company owes money to for goods or services that have been delivered but not yet paid for.

Debtors

Individuals or companies that owe money to another party, often referred to in the context of accounts receivable.

Benefactors

Benefactors are individuals, organizations, or other entities that provide financial or other types of support to individuals, organizations, or causes.

Corporate Form

A business structure where the entity is distinct from its owners, providing limited liability protection, ease of transferring ownership, and potential for growth.