At December 31, 2015, Gem Garments Inc

question 88

Multiple Choice

At December 31, 2015, Gem Garments Inc.has 10,000, $5, cumulative preferred shares issued.If the board of directors declares a $40,000 dividend at this date

• A)the company will still owe the preferred shareholders $10,000 and should record a dividend payable for this amount.
• B)the company will owe the preferred shareholders nothing further.
• C)$10,000 will be disclosed as dividends in arrears in the notes to the financial statements.
• D)the company still has to pay the preferred shareholders $50,000, regardless of what amount was declared.

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Definitions:

Stock Market

A marketplace where shares of public companies are bought and sold.

Actual Money Multiplier

The real-world effect of a change in the base money supply on the money supply, taking into account changes in reserves and currency holdings.

Simple Money Multiplier

Refers to the ratio indicating the maximum amount of money that banks can theoretically generate with each dollar of reserves.

Cash Withdrawals

The process of taking money out of a bank account using a debit card or bank slip.