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Homework answers / question archive / Louisiana State University, Shreveport ACCT 701 TRUE-FALSE STATEMENTS 1)Cash dividends are not a liability of the corporation until they are declared by the board of directors

Louisiana State University, Shreveport ACCT 701 TRUE-FALSE STATEMENTS 1)Cash dividends are not a liability of the corporation until they are declared by the board of directors

Accounting

Louisiana State University, Shreveport

ACCT 701

TRUE-FALSE STATEMENTS

1)Cash dividends are not a liability of the corporation until they are declared by the board of directors.

 

 

  1. The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

 

 

3. A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

 

 

  1. A stock dividend does not affect the total amount of stockholders’ equity.

 

 

  1. A stock split results in a transfer at market value from retained earnings to paid-in capital.

 

 

  1. A 3-for-1 common stock split will increase total stockholders’ equity but reduce the par or stated value per share of common stock.

 

 

  1. Retained earnings represents the amount of cash available for dividends.

 

 

  1. Dividends in arrears are liabilities of the corporation.

 

 

  1. Net income of a corporation should be closed to retained earnings and net losses should be closed to paid-in capital accounts.

 

 

  1. A debit balance in the Retained Earnings account is identified as a deficit.

 

 

  1. Retained earnings that are restricted are unavailable for dividends.

 

 

  1. Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends.

 

 

  1. A detailed stockholders’ equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record.

 

 

  1. The Common Stock Distributable account is classified as a current liability.

 

 

  1. Return on common stockholders’ equity is computed by dividing net income by ending stockholders’ equity.

 

 

  1. The payout ratio is computed by dividing total cash dividends paid on common stock by retained earnings.

 

 

17.          A liability arises when the board of directors declares a stock dividend.

 

 

18.          A stock dividend is a pro rata distribution of cash to a corporation’s stockholders.

 

 

19.          A stock dividend will cause an increase in total contributed capital at the date the dividend is declared.

 

 

 

 

 

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