Which of the Following Statements Is Correct Relating to Common

question 32

Multiple Choice

Which of the following statements is correct relating to common stock certificates of a publicly traded company that uses the services of a transfer agent?

• A)Stock certificates should exist for all outstanding stock and be held by the owner of the stock.
• B)Stock certificates should exist for all outstanding stock and be held either by the owner of the stock or a representative of the owner (e.g. ,brokerage firm).
• C)A lack of stock certificates is ordinarily considered a material weakness in internal control.
• D)Stock certificates often are not issued in today's electronic environment.

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Definitions:

Fixed Assets

Long-term tangible assets that are used in the operations of a business and are not expected to be converted into cash in the upcoming year.

Retained Earnings

The amount of net income left over for the business after it has paid out dividends to its shareholders, often reinvested in the business or used to pay down debt.

Cash Flow from Assets

This is the total amount of money being transferred in and out of a company's assets, including operations, investments, and financing activities.

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life, reflecting the assets diminishing value over time due to use, wear and tear, or obsolescence.