Question Details

effects of the declaration of a cash dividend




1.	Which of the following is not a significant date with respect to dividends?
a.	The declaration date
b.	The incorporation date
c.	The record date
d.	The payment date



	2.	On the dividend record date,
a.	a dividend becomes a current obligation.
b.	no entry is required.
c.	an entry may be required if it is a stock dividend.
d.	Dividends Payable is debited.



	3.	Which of the following statements regarding the date of a cash dividend declaration is not accurate?
a.	The dividend can be rescinded once it has been declared.
b.	The corporation is committed to a legal, binding obligation.
c.	The board of directors formally authorizes the cash dividend.
d.	A liability account must be increased.



	4.	Dividends Payable is classified as a
a.	long-term liability.
b.	contra stockholders' equity account to Retained Earnings.
c.	current liability.
d.	stockholders' equity account.


5.	Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:
	Total Assets	Total Liabilities	Total Stockholders' Equity
a.	Increase	Decrease	No change
b.	No change	Increase	Decrease
c.	Decrease	Increase	Decrease
d.	Decrease	No change	Increase




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