1. For a dividend to NOT be legal

a. the Board of Directors must declare a dividend. b. there must be retained earnings greater than the amount of the dividend. c. there must be a notification posted in the newspaper for the meeting. d. there must be enough cash to cover the dividend on the date of declaration

2. The Board of Directors voted to set aside $40,000 cash for the Sinking Fund. What is the effect of the transaction on cash and total assets?

1. Cash increases, total assets increase c. Cash increases, assets decrease
2. Cash decreases, total assets stay the same d. None of the above