Question Details

effect of the declaration of a cash dividend




1.	Which one of the following is not necessary in order for a corporation to pay a cash dividend?
a.	Adequate cash
b.	Approval of stockholders
c.	Declaration of dividends by the board of directors
d.	Retained earnings



	2.	If a corporation declares a dividend based upon paid-in capital, it is known as a
a.	scrip dividend.
b.	property dividend.
c.	paid dividend.
d.	liquidating dividend.



	3.	The date on which a cash dividend becomes a binding legal obligation is on the
a.	declaration date.
b.	date of record.
c.	payment date.
d.	last day of the fiscal year-end.



	4.	The effect of the declaration of a cash dividend by the board of directors is to
		Increase			Decrease	
a.	Stockholders' equity	Assets
b.	Assets	Liabilities
c.	Liabilities	Stockholders' equity
d.	Liabilities	Assets



5.	The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to
a.	decrease total liabilities and stockholders' equity.
b.	increase total expenses and total liabilities.
c.	increase total assets and stockholders' equity.
d.	decrease total assets and stockholders' equity.





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