Chapter 16 Review

What does the term "capital" refer to in a business context?

• The total debts of a company

• The money required to start or expand a business

• The annual revenue of a business

• The physical location of a business

What is meant by "equity capital"?

• Loans taken by the business

• Investments in stock market by the business

• Business owners' personal financial contributions to the business

• Government grants to the business

What are "retained earnings" in a business?

• Earnings invested in marketing

• Profits distributed among shareholders

• Profits saved for future use by the business

• Funds borrowed from financial institutions

What are the three methods of obtaining capital for a business?

• Equity capital, Debt capital, Retained earnings

• Government grants, Private investments, Public offerings

• Sales revenue, Equity capital, Debt capital

• Retained earnings, Sales revenue, Government grants

Which of the following is NOT a form of obtaining equity capital?

• Common Stock

• Preferred Stock

• Retained Earnings

• Bonds

How is equity capital obtained in a proprietorship type of business ownership?

• Additional investments by the owner

• Investments by new partners

• Retained earnings

• Selling corporate bonds

How can equity capital be sourced in a partnership business?

• Additional investments by any or all partners

• Additional investments by the owner

• Retained earnings

• Issuing shares

What is the source of equity capital in a corporation?

• Retained earnings or selling shares

• Additional investments by the owner

• Investments by new partners

• Private loans

What does common stock represent in a business?

• A type of bond issued by the company

• Ownership that includes voting rights and profit sharing through dividends

• A fixed interest rate agreed upon at the time of purchase

• A certificate of debt owed by the company to the stockholder

What is the par value of a stock?

• The market value of the stock at any given time

• The minimum selling price of the stock set by the company

• A dollar value shown on a share of stock, used for accounting purposes

• The maximum liability of the stockholder