81.Dividends become a liability of a corporation: 
 
 

A. On the date the board of directors declares the dividend.

 

B. On the date of record.

 

C. On the date payment is to be made.

 

D. When cumulative preferred stock dividends are in arrears.

 

 

 

 

82.A liquidating dividend: 
 
 

A. Occurs when a corporation distributes shares of its own stock as a dividend, rather than cash.

 

B. Occurs whenever a corporation distributes non-cash assets as a dividend to its stockholders.

 

C. Represents a distribution of a corporation's profits to the stockholders.

 

D. Represents a return of invested capital to a corporation's owners, the stockholders.

 

 

 

 

83.Dividends are first recorded and retained earnings are reduced on: 
 
 

A. The ex-dividend date.

 

B. The date of record.

 

C. The date of declaration.

 

D. The date of payment.

 

 

 

 

84.As a result of a 5% stock dividend: 
 
 

A. Total stockholders' equity decreases by 5%.

 

B. The par value per share decreases by 5%.

 

C. The number of shares owned by each stockholder increases by 5%, but total stockholders' equity does not change.

 

D. Both the number of shares outstanding and the total stockholders' equity increase by 5%.

 

 

 

 

85.A large stock dividend and a stock split are similar in that they both cause a: 
 
 

A. Reduction in total stockholders' equity.

 

B. Reduction in retained earnings.

 

C. Reduction in the par value per share.

 

D. Reduction in the market price per share.

 

 

 

 

86.Supervox Corporation declared a 3-for-2 common stock split, but this transaction was erroneously recorded as a 50% common stock dividend. As a result: 
 
 

A. Retained earnings is understated.

 

B. The total dollar amount of stockholders' equity is overstated.

 

C. The corporate records do not show the correct number of shares of common stock outstanding.

 

D. The common stock account is understated.

 

 

 

 

87.Declaration and distribution of a stock dividend cause each of the following effects except: 
 
 

A. An increase in the number of shares of stock outstanding.

 

B. A decrease in retained earnings.

 

C. A decrease in total assets of the issuing corporation.

 

D. An increase in legal capital of the issuing corporation.

 

 

 

 

88.A 2-for-1 stock split: 
 
 

A. Is accounted for in the same way as a 100% stock dividend.

 

B. Increases the number of outstanding shares of common stock, but par value per share remains the same as before the split.

 

C. Is recorded by transferring the par value of additional shares from retained earnings to the common stock account.

 

D. Should logically cause the market price per share to drop by approximately 50%.

 

 

 

 

89.When a stock dividend is declared, total stockholders' equity will: 
 
 

A. Decrease.

 

B. Increase.

 

C. Not change.

 

D. Increase or decrease, depending upon whether it's a small or large stock dividend.

 

 

 

 

90.A liquidating dividend: 
 
 

A. Occurs only when a company is going out of business.

 

B. Occurs when a corporation pays a dividend that exceeds the balance in the retained earnings account.

 

C. Is an expense to the corporation.

 

D. Occurs only when the corporation has a loss for the year.