Normally, the payment of a previously declared dividend will result in:

A. a decrease in liabilities.

B. a decrease in working capital.

C. a decrease in stockholders' equity.

D. All of the above.

E. None of these.

If dividends omitted on preferred shares must be paid before common stockholders are entitled to any dividends, then the preferred stock must be:

A. participating.

B. callable.

C. convertible.

D. cumulative.

E. None of these.

3. Dividends in arrears:

A. pertain to cumulative preferred stock.

B. are recorded as a liability.

C. pertain to cumulative common stock.

D. both A and B, above.

E. None of these.

4.Which of the following statements about treasury stock is true?

A. Excess of the sales price over cost should be credited to retained earnings.

B. Gains are not recorded on treasury stock transactions but losses are.

C. Losses on treasury stock transactions are recorded in income.

D. Reacquiring treasury stock causes stockholders equity to decrease.

E. None of these.

5.Reissuing treasury stock at more than its cost will trigger a credit to:

A. Gain.

B. Paid-in Capital in Excess of Par.

C. Retained Earnings.

D. Cash.

E. None of these.

6.Smith has 300,000 shares of common stock outstanding with a par value of $3 per share. Smith authorized a 10% stock dividend when the market value was $8 per share. A journal entry for the stock dividend would require:

A. No entry is needed.

B. a debit to Retained Earnings for $90,000.

C. a credit to Common Stock for $240,000.

D. a credit to Paid-in Capital in Excess of Par for $150,000.

E. None of these.