What do an appropriation of accumulated profits and a declaration of a cash dividend have in common? * a. Both increase the amount of appropriated accumulated profits b. Both result in a decrease in unappropriated accumulated profits c. Both have the same consequences for shareholders d. Both permanently reduce future ability to pay dividends

What do an appropriation of accumulated profits and a declaration of a cash dividend have in common? * a. Both increase the amount of appropriated accumulated profits b. Both result in a decrease in unappropriated accumulated profits c. Both have the same consequences for shareholders d. Both permanently reduce future ability to pay dividends

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter12: Valuation: Cash-flow Based Approaches

Section: Chapter Questions

Problem 3QE

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Which of the following is true of a stock dividend? A. It is a liability. B. The decision to issue a stock dividend resides with shareholders. C. It does not affect total equity but transfers amounts between equity components. D. It creates a cash reserve for shareholders.
How does the accounting for a liquidating dividend differ from that for a normal cash dividend?
56 What do an appropriation of retained earnings and a declaration of a cash dividend (for the same amount) have in common? Group of answer choices both result in a decrease in unappropriated retained earnings. both have the same consequences for shareholders. both increase the amount of appropriated retained earnings. both permanently reduce the future ability to pay dividends.
An appropriation of Retained Earnings a. leaves total Retained Earnings unchangedb. means that cash has been set aside for a specific purposec. reduces the amount of Retained Earnings available for dividendsd. both leaves total Retained Earnings unchanged and reduces the amount of Retained Earnings available for dividends
Which of the following is most likely true regarding payment of dividends? a. Dividends may be paid from legal capital b. Retained earnings are available for dividends unless restricted by contract or by statute c. Unrealized capital is available for any type of dividend d. Capital from donated assets is available for dividends
1What amount is credited to Retained Earnings upon settlement if the shareholders have chosen the cash alternative? 2. How much is the gain recognized upon settlement if the shareholders have chosen the noncash alternative instead?
What amount is credited to Retained Earnings upon settlement if the shareholders have chosen the cash alternative?
How does the declaration of a cash dividend affect a company’s assets, liabilities, and equity?a. It results in an increase to liabilities and a decrease to stockholders’ equity, while assetsremain the same.b. It results in an increase to liabilities and a decrease to assets, while stockholders’ equityremains the same.c. It results in an increase to assets and a decrease to liabilities, while stockholders’ equityremains the same.d. It results in an increase to stockholders’ equity and a decrease to assets, while liabilitiesremain the same
which one is correct please confirm? QUESTION 26 Under dividend reinvestment plans, shareholders can automatically ____. a. transfer from retained earnings accounts to equity accounts. b. use dividends to purchase additional shares c. reduce their taxable income d. increase their cash inflows
The cost of retained earnings is less than the cost of ordinary shares because of *a. the issuance cost.b. agency costs of free cash flow.c. the taxation on earnings.d. the trust fund doctrine.
4) XYZ Corporation declares and distributes a cash dividend that is a result of current earnings. Under both the fair value and equity method, the receipt of these dividends will be recorded as dividend revenue by the investor. (True/False)
Which of the following statements is incorrect? A. Dividend payments can be influenced by cash availability. B.Dividends shall not be paid out of assets to protect the creditors. C. Corporations must pay their investors dividends so they will not be charged penalty for improper accumulation. D. Additional funding may be sourced from retained earnings.