Concept explainers
Stock Dividends: It refers to the payment of dividends by a company to its existing shareholders, in the form of additional shares rather than cash. Stock dividends are paid, when there is an inadequate cash available in the company.
Cash dividends: The amount of cash provided by a corporation out of its distributable profits to its shareholders as a return for the amount invested by them is referred as cash dividends.
Stock Splits: It is a method of increasing the total number of outstanding shares thereby, reducing the market price of each share, however, keeping the corporation’s total market value constant.
To indicate: effect of each of the given transactions on total assets, total liabilities, and
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- Classification of Financial Statement Items Classify each of the following items according to (1) whether it belongs on the income statement (IS) or balance sheet (BS) and (2) whether it is a revenue (R), expense (E), asset (A), liability (L), or stockholders equity (SE) item.arrow_forwardFinancial statement items Identify each of the following items as (a) an asset, (h) a liability, (c) revenue, (d) an expense, or (e) a dividend:arrow_forwardWhat is the impact on the accounting equation when stock is issued, in exchange for assets? A. both sides increase B. both sides decrease C. only the Asset side changes D. neither side changesarrow_forward
- Which of the following accounts is increased by a debit? A. Common Stock B. Accounts Payable C. Supplies D. Service Revenuearrow_forwardFor each of the following independent transactions, indicate whether there was an increase, a decrease, or no impact for each financial statement element. Table 2.9arrow_forwardIdentify whether each of the following accounts would be considered a permanent account (yes/no) and which financial statement it would be reported on (Balance Sheet, Income Statement, or Retained Earnings Statement). A. Common Stock B. Dividends C. Dividends Payable D. Equipment E. Income Tax Expense F. Income Tax Payable G. Service Revenue H. Unearned Service Revenue I. Net Incomearrow_forward
- What are the effects of the following transactions on the accounting equation? Indicate an increase (+) or decrease () under the affected asset, liability, and owners equity headings.arrow_forwardOn which financial statement would the Dividends account appear? A. Balance Sheet B. Income Statement C. Retained Earnings Statement D. Statement of Cash Flowsarrow_forwardWhich of the following describes the information reported in the statement of stockholders’ equity? a. Net income for the period calculated as revenues minus expenses.b. Total assets equal total liabilities plus stockholders’ equity.c. Change in stockholders’ equity through changes in common stock and retained earnings.d. Net cash flows from operating, investing, and financing activities.arrow_forward
- Define the accounting equation and the expand version of the accounting equation. Provide examples of each of the following: assets, liabilities, equity( common stock, dividends, revenue, expenses too).arrow_forwardCONSTRUCT THE FOLLOWING: (a) Income Statement (b) Statement of changes in equity (c) Balance SheetPlease show COMPLETE solutionarrow_forwardA-.Create the ratio of fixed assets to long-term liabilities B-. Create the ratio of liabilities to stockholders' equityarrow_forward
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