The Par or Stated Value of Ordinary Shares Is Important

question 39

Multiple Choice

The par or stated value of ordinary shares is important for

• A) helping the market determine the trading price of the share.
• B) accounting purposes only.
• C) helping the board of directors determine the dividend payout.
• D) helping the investor determine the share's intrinsic value.

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Definitions:

Responsibility Centres

Sections or departments within an organization, each overseen by a manager who is accountable for its performance and financial outcomes.

Support Department Costs

Expenses associated with departments that do not directly produce goods or services but support those who do, like maintenance or administration.

Manufacturing Costs

Expenses directly tied to the process of producing finished goods, including raw materials, labor, and overhead costs.

Period Costs

Costs that are not directly tied to the production process and are expensed within the period they are incurred, such as selling, general, and administrative expenses.