Multiple Choice accounting MULTIPLE CHOICE. Choose the one alternative that best

ID: 2474040 • Letter: M

Question

Multiple Choice accounting

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question 1) Which of the following is true of dividends? A) Dividends increase assets and decrease total stockholders' equity of a corporation. B) Dividends are a distribution of cash, stock, or other assets to the stockholders C) Dividend pay D) Dividend payments increase stockholders' equity ments decrease paid-in capital. 2) ABC has 45,000 shares of S10 par common stock outstanding. They offer a stock split of 4-for-1. The effect of the split will be A) par stays at $10; total shares go to 11,250 B) par drops to $5; total shares stay at 45,000 C) par goes to S40; total shares go to 180,000 D) par drops to $2.50, total shares go to 180,000 3) On the cash dividends become a liability of a corporation A) end of the fiscal year B) date of record C) payment date D) declaration date

Explanation / Answer

Split is 4-1.

So Par goes down to 10/4=2.5

Total shares go up =45000*4=180,000

Nos

Price /share

Value

Equity $ 1 par

20,000

280,000

Preferred stock $100 par

1,000

100

100,000

Total Paid in capital

380,000

Preferred

Common

No Outstanding

15,000

25,000

Arrear dividend

37,500.00

Current Dividend

75,000

7,500

Total Dividend

112,500

7,500

Dividend Per share=

$ 7.50

$ 0.30

Nos