A Company with 100,000 Authorized Shares of $4 Par Common

question 71

Multiple Choice

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

• A) decrease retained earnings, increase common stock, and increase paid-in capital
• B) increase retained earnings, decrease common stock, and decrease paid-in capital
• C) increase retained earnings, decrease common stock, and increase paid-in capital
• D) decrease retained earnings, increase common stock, and decrease paid-in capital

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Definitions:

Business Processes

The set of systematic activities or tasks that produce a specific service or product for a particular customer or market.

Automated Work Cell

A system comprised of robotic or mechanical units designed to perform a variety of tasks autonomously with minimal human intervention.

Centralized Computer

A single computing system or server that provides services, resources, or data to multiple users or client machines.

Little Penalty

Minor consequences or repercussions applied when objectives, targets, or deadlines are missed, often used to incentivize performance without imposing severe sanctions.