Question Details

The declaration and distribution of a stock 



1.	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.

	2.	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
	3.	Which of the following statements about dividends is not accurate?
a.	Many companies declare and pay cash quarterly dividends.
b.	Low dividends may mean high stock returns.
c.	The board of directors is obligated to declare dividends.
d.	A legal dividend may not be a feasible one.

	4.	The cumulative effect of the declaration and payment of a cash dividend on a company's balance sheet is to
a.	decrease current liabilities and stockholders' equity.
b.	increase total assets and stockholders' equity.
c.	increase current liabilities and stockholders' equity.
d.	decrease stockholders' equity and total assets.

	5.	The declaration and distribution of a stock dividend will
a.	increase total stockholders' equity.
b.	increase total assets.
c.	decrease total assets.
d.	have no effect on total assets.





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