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:

Collusion

A secret agreement or cooperation between parties for a deceitful or fraudulent purpose.

Essential Elements

Fundamental or core components that are necessary for a certain process, concept, or system to function effectively.

Establishing Alliance

The process of building a collaborative and trusting relationship, particularly in therapeutic or professional contexts.

Locked

A state in which a digital object or file is protected from being edited or deleted.