Undistributed Stock Dividends Should Be Reported as

question 64

Multiple Choice

Undistributed stock dividends should be reported as

• A) a current liability.
• B) an addition to capital stock outstanding.
• C) a reduction in total stockholders' equity.
• D) a note to the financial statements.

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Definitions:

Retained Earnings

The portion of a business's profits not distributed to shareholders as dividends but retained for reinvestment in the business or to pay debt.

Net Income

The amount of profit remaining after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from total revenue; also known as net profit.

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash payments or additional shares.

Par Common Stock

Par common stock is the nominal or face value assigned to common shares in the corporate charter, often impacting the accounting treatment of stock issuance.