1)

A stock dividend transfers:

contributed capital to Retained Earnings.

Retained Earnings to assets.

contributed capital to assets.

Retained Earnings to contributed capital.

2)

Preferred stockholders:

must receive dividends every year.

have the right to receive dividends only in the years the board of directors declares dividends.

have the right to receive dividends only if there are enough dividends to pay the common stockholders too.

must receive more dividends per share than the common stockholders.

3)

Nova, Inc. is considering declaring a $100,000 cash dividend. Nova has a cash balance of $20,000 and Retained Earnings balance of $100,000. Nova should:

declare a cash dividend because it has enough Retained Earnings and cash.

declare a cash dividend because it has enough Retained Earnings.

not declare a cash dividend because it does not have enough Retained Earnings.

not declare a cash dividend because it does not have enough cash.

4)

Items such as unrealized gains and losses from pensions, foreign currencies or financial investments are reported as:

accumulated other comprehensive income.

treasury stock.

contributed capital.

financing activities.

5)

A current dividend preference means that:

preferred stockholders are paid current dividends before common stockholders are paid dividends.

unpaid dividends to preferred stockholders accumulate and must be paid before common stockholders receive dividends.

preferred stockholders are paid their full fixed dividend rate each period as long as the company is in operation.

unpaid cash dividends to preferred stockholders must be replaced with stock dividends during the current period.

7)

Stock splits and large stock dividends have which of the following similarities or differences in their effects and requirements for a journal entry?

	Effect on Number of Shares	Effect on Par Value per Share	Requirement for Journal Entry
A)	Both change the number of shares outstanding	Changes only for a stock split	Required only for a stock dividend
B)	Both change the number of shares outstanding	Changes only for a stock split	Neither require a journal entry
C)	Both change the number of shares outstanding	Neither affect par value per share	Both require journal entry
D)	Neither change the number of shares outstanding	Changes only for a stock dividend	Required only for a stock dividend

Option A

Option B

Option C

Option D