True or False

1. A detailed shareholders' equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record. T/F

2. An event or transaction should be classified as an extraordinary item if it is unusual in nature or if it occurs infrequently. T/F

3. The price-earnings ratio is the best method for comparing earnings across companies. T/F

Multiple choice:

1. Which one of the following is not necessary in order for a corporation to pay a cash dividend?

a) Adequate cash

b) Approval of stockholders

c) Declaration of dividends by the board of directors

d) Retained earnings

2. Dividends Payable is classified as a

a) long-term liability.

b) contra shareholders' equity account to Retained Earnings.

c) current liability.

d) shareholders' equity account.

3. The board of directors must assign a per share value to a stock dividend declared that is

a) greater than the book value.

b) at the discretion of the board of directors.

c) equal to the issue price of the original share.

d) equal to the fair market value per share.