If a Firm Has Retained Earnings of $4 Million, a Common

question 69

Multiple Choice

If a firm has retained earnings of $4 million, a common shares account of $7 million, and additional paid-in-capital of $3 million, how much would be transferred in (or out) of these accounts in response to a 20 percent stock dividend, respectively?

• A) − 20 percent, 0 percent, + 20 percent
• B) − 20 percent, + 20 percent, 0 percent
• C) − 50 percent, + 20 percent, + 20 percent
• D) − 50 percent, + 25 percent, + 25 percent

---

Definitions:

Preoperational

A stage in Piaget's theory of cognitive development, typically from ages 2 to 7, where children start to engage in symbolic play but lack the ability to perform operations or mental manipulations.

Equilibrate

The process of achieving balance or stability within a system, particularly in the context of cognitive development as described by Jean Piaget.

Piaget

A psychologist known for his theory of cognitive development that describes how children's intellect grows through stages.