ACC 291 Week 3 Discussion Questions and Responses –
TUTORIAL: Includes guides for INITIAL RESPONSE to discussion questions DQ1 through DQ4 and guides for STUDENT RESPONSES to other students for all discussion questions.
Individual Assignment: Discussion Questions
The following are characteristics of a corporation: (a) separate legal existence, (b) limited liability of stockholders, and (c) transferable ownership rights. Explain these characteristics.
The board of directors where you work is considering either a stock split or a stock dividend. They understand that total stockholders’ equity will remain the same under either action. However, they are not sure of the different effects of the two types of actions on other aspects of stockholders’ equity. Explain the differences to the directors.
1) What are three reasons why companies purchase investments in debt or stock securities?
2) Why would a corporation have excess cash that it does not need for operations?
3) What is the typical investment when investing cash for short periods of time?
1) What are the typical investments when investing cash to generate earnings?
2) Why would a company invest in securities that provide no current cash flows?
3) What is the typical stock investment when investing cash for strategic reasons?
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