# When a C corporation has only one class of stock it is referred to as ________. A. stated value stock B. par value stock C. common stock D. preferred stock

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 14, Problem 6MC
Textbook Problem
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## When a C corporation has only one class of stock it is referred to as ________.A. stated value stockB. par value stockC. common stockD. preferred stock

To determine

Introduction:

Most of the stock trading—buying and selling of shares by investors—takes place through brokers, registered members of the stock exchange who buy and sell stock on behalf of others. Online access to trading has broadened the secondary market significantly over the past few decades.

To choose:

The correct option.

### Explanation of Solution

Explanation for correct answer:

A company’s primary class of stock issued is common stock, and each share represents a partial claim to ownership or a share of the company’s business. For many companies, this is the only class of stock they have authorized.

Common stockholders have four basic rights.

1. Right to vote − They have the right to vote on corporate matters, including the selection of corporate directors and other issues requiring the approval of owners.
2. Right to share in corporate net income − They have the right to share in corporate net income proportionally through dividends.
3. Right to share in any distribution of assets − They have the right to share in any distribution of assets after all creditors and any preferred stockholders have been paid.
4. Preemptive right − They have a preemptive right, which allows shareholders the option to maintain their ownership percentage when new shares of stock are issued by the company.

Explanation for incorrect answers:

Stated value stock - Under some state laws, corporations are sometimes allowed to issue no-par stock—a stock with no par value assigned...

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