Declaring and Distributing Stock Dividends

question 6

Multiple Choice

Declaring and distributing stock dividends:

• A)is the distribution of cash to the stockholders.
• B)increases the total liabilities of the corporation and decreases the total stockholders' equity.
• C)reduces the total assets of the corporation.
• D)has no effect on total stockholders' equity.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, typically expressed as an annual rate.

Income Tax Expense

The amount of income tax a company or individual owes to the government based on the applicable tax rates and rules.

Instalments

Payments made regularly over time to settle a debt or purchase, allowing for the total cost to be paid incrementally rather than as a lump sum.

Semi-Annually

Occurring or conducted twice a year, typically every six months.