35) A liability for dividends exists: A) On the date of record. B) On the date of declaration. C) For dividends in arrears on cumulative preferred stock. D) When cumulative preferred stock is sold. E) On the date of payment.

36) A company's board of directors votes to declare a cash dividend of $0.75 per share of common stock. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is: A) $14,625. B) $7,500. C) $11,250. D) $10,250. E) $7,125.

37) Which of the following is true of a stock dividend? A) Does not affect total equity, but transfer amounts between the components of equity. B) Transfers a portion of equity from retained earnings to a cash reserve account. C) The decision to declare a stock dividend resides with the shareholders. D) It is a liability on the balance sheet. E) Reduces a corporation's assets and stockholders' equity.

38) Torino Company has 10,000 shares of $5 par value, 4% cumulative and nonparticipating preferred stock and 100,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is: A) $0. B) $4,000. C) $3,000. D) $1,000. E) $2,000.

39) Treasury stock is classified as: A) A contra equity account. B) A liability account. C) An asset account. D) A revenue account. E) A contra asset account.

40) Corporations may buy back their own stock for any of the following reasons except to: A) Have shares available for a merger or acquisition. B) Avoid a hostile take-over. C) Have shares available for employee compensation. D) Maintain market value for the company stock. E) Allow management to assume the voting rights.