If a Firm Has Retained Earnings of $40 Million, a Common

question 35

Multiple Choice

If a firm has retained earnings of $40 million, a common shares account of $50 million, and additional paid-in-capital of $25 million, how much would be transferred in (or out) of these accounts in response to a 40 percent stock dividend, respectively?

• A) − 40 percent, 0 percent, + 40 percent
• B) − 40 percent, + 40 percent, 0 percent
• C) − 75 percent, + 37.5 percent, + 37.5 percent
• D) − 75 percent, + 40 percent, + 40 percent

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Definitions:

Salmon

A species of fish that is often used in research related to homing behavior, as they return to their birthplace to spawn.

Instinct

The inherent inclination of a living organism towards a particular complex behavior, driven by the need to survive and reproduce.

Incentives

Things that attract or lure people into action.

Biological Needs

Fundamental requirements that organisms must fulfill to maintain their bodily functions and ensure survival, such as the need for food, water, and shelter.