All of the following statements regarding stock dividends are true except:
A. Stock dividends decrease the number of shares outstanding.
B. Stock dividends provide evidence of management's confidence that the company is doing well.
C. Stock dividends do not reduce assets or equity.
D. Directors can use stock dividends to keep the market price of the stock affordable.
E. Stock dividends transfer a portion of equity from retained earnings to contributed capital.
Answer: A
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A company purchases 400 shares of its $50 par value common stock at $55 per share. It then reissues 60 shares at $58 per share. The entry upon reissue of the stock would be:
a. Cash 3,480 Treasury Stock-Common 3,300 Paid-in Capital, Treasury Stock 180 b. Cash 3,480 Treasury Stock-Common 3,480 c. Cash 3,480 Paid-in Capital, Treasury Stock 3,480 d. Cash 3,480 Treasury Stock-Common 3,000 Retained Earnings 480
Select the type of business that is most likely to obtain large amounts of resources by issuing stock
A) Partnership B) Corporation C) Proprietorship D) None are correct.
Merchandise with a sales price of $800 is sold on account with term 2/10, n/30. The journal entry to record the sale would include a
A) debit to Cash for $800 B) Debit to Sales Discounts for $16 C) Credit to Sales for $800 D) Debit to Accounts Receivable for $784
Which of the following is an advantage of a general partnership?
A) It has an unlimited lifetime. B) Taxes are levied on a partnership and not on its owners. C) Expenses required for creating a partnership are low. D) Ownership interests are easily transferable.