CH13.2 Do In Class Handout Circle the correct answer True/False (If False, Explain Why) 1. The cumulative effect of the declaration and payment of a cash dividend is to decrease both stockholders' equity and total assets. True False A stock split does not have any effect on total paid-in capital, retained earnings, or total stockholders' equity 2. True False 3. A stock dividend results in a decrease in retained eamings and a decrease in total stockholders' equity. True False Earnings per share is reported for both common and preferred stock True 4. False 5. Income tax expense is reported in a separate section of the corporation income statement before net income. True The return on common stockholders' equity shows how many dollars of net income False 6. were earned for each dollar invested by stockholders. True False A prior period adjustment always includes a credit to Retained Earnings. True False 7. 8. A restriction on retained earnings is described as a cash fund established for a specific future purpose True False 9. The accounting effects of a restriction on retained earnings is limited entirely to the retained earnings section of stockholders' equity True False Three important dates when cash dividends are involved are: date of declaration, date of record, and date of payment. True False 10