A Corporation Selling Stock Is Obligated to

question 48

Multiple Choice

A corporation selling stock is obligated to

• A)guarantee your investment.
• B)repay money obtained from the sale of stock.
• C)repurchase shares of stock at a later date.
• D)pay dividends to preferred stockholders before dividends are paid to common stockholders.
• E)pay dividends.

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Definitions:

Machine-hours

A measure of the time that machines are operating, often used as a basis for allocating manufacturing overhead costs.

Direct Materials Cost

The cost of raw materials and components that are directly used in the production of a product.

Direct Labor-hours

Direct labor-hours are the total time workers spend on producing a particular unit of goods or services.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production based on a certain activity base, such as labor hours or machine hours.