Stockholders of a business enterprise are said to be

25. Stockholders of a business enterprise are said to be the residual owners. The term residual
owner means that shareholders
a. are entitled to a dividend every year in which the business earns a profit.
b. have the rights to specific assets of the business.
c. bear the ultimate risks and uncertainties and receive the benefits of enterprise
ownership.
d. can negotiate individual contracts on behalf of the enterprise.
26. Total stockholders' equity represents
27. A primary source of stockholders' equity is 28. Stockholders' equity is generally classified into two major categories:
29. The accounting problem in a lump sum issuance is the allocation of proceeds between the
classes of securities. An acceptable method of allocation is the
a. pro forma method.
b. proportional method.
c. incremental method.
d. either the proportional method or the incremental method.
30. When a corporation issues its capital stock in payment for services, the least appropriate
basis for recording the transaction is the
31. Direct costs incurred to sell stock such as underwriting costs should be accounted for as

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Test Bank for Intermediate Accounting, Fourteenth Edition
32. A "secret reserve" will be created if
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