When Reporting Stockholders' Equity on the Balance Sheet, a Corporation

question 82

Multiple Choice

When reporting stockholders' equity on the balance sheet, a corporation lists the accounts in the following order:

• A)Common stock, preferred stock, retained earnings
• B)Preferred stock, common stock, retained earnings
• C)Retained earnings, preferred stock, common stock
• D)There is no preferred order.

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Definitions:

Authorized

Officially given a right or power to do something or the condition of having official permission.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.

Revised Act

A law that has been formally amended or rewritten to include new provisions or correct errors.

Stock Option

A financial derivative that represents a legal right to buy or sell a particular stock at a predetermined price within a specified time period.