A Company Issues 1 Million Shares of Preferred Shares with a Price

question 51

Multiple Choice

A company issues 1 million shares of preferred shares with a price of $26 per share.The issuance should be recorded as:

• A)a debit to Cash of $26 million and a credit to Preferred Shares of $26 million.
• B)a debit to preferred shares of $26 million and a credit to cash of $26 million.
• C)a debit to Cash of $24 million,a debit to Treasury Shares of $2 million,and a credit to Preferred Shares of $26 million.
• D)a debit to Cash of $26 million,a credit to Preferred Shares of $2 million,and a credit to Additional Paid-in Capital of $24 million.

Interpret the impact of economic policies on GDP and overall economic welfare.

Understand the concept of asymmetric information in economics.

Comprehend the moral-hazard problem and its implications in the labor market.

Grasp the principle of adverse selection and its classic examples.

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Definitions:

Social Class

A division of a society based on social and economic status.

Postindustrial Society

A society economically dependent upon the production and distribution of services, information, and knowledge.

Agricultural Society

A society that relies on farming and cultivation of the land as the primary source of livelihood and economic activity.

Industrial Society

A society characterized by a reliance on mechanized labor to create goods, leading to urbanization and changes in social structures.