1.In the real world, we find that dividends:

a)	usually exhibit greater stability than earnings.

b)	fluctuate more widely than earnings.

c)	tend to be a lower percentage of earnings for mature firms than for newer firms.

d)	are usually set as a fixed percentage of earnings every year.

2.

The company with the common equity accounts shown here has declared a 10 percent stock dividend when the market value of its stock is $20 per share. What is the capital surplus account after the 10 percent stock dividend?

Common stock ($1 par value)	$ 406,000
Capital Surplus	1,340,000
Retained earnings	3,427,000
Total owners equity	$ 5,173,000

a)

$568,600

b)	$1,218,000

c)	$1,380,600

d)	$2,111,400

e)	$3,467,600