A Share Dividend

question 41

Multiple Choice

A share dividend:

• A) Is a distribution of additional shares to its shareholders without receiving any payment.
• B) Transfers a portion of equity from retained earnings to contributed capital.
• C) Is often referred to as a stock dividend.
• D) Does not reduce a corporation's assets and equity.
• E) All of these answers are correct.

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Definitions:

Liquidation Bankruptcy

A legal process designed to pay off the debts of an individual or company by liquidating their assets, often referred to as Chapter 7 bankruptcy in the United States.

Creditor

An individual or organization to which money is owed by a debtor, usually arising from a financial transaction or agreement.

Bankruptcy Trustee

A person appointed by the bankruptcy court to administer the debtor’s estate in the interests of both the debtor and the creditors. The basic duty of the bankruptcy trustee is to collect and reduce to cash the estate property and to close up the estate as speedily as is compatible with the best interests of the parties.

Chapter 7

A provision of the Bankruptcy Code that provides for "liquidation," where a debtor's non-exempt assets are sold to pay creditors.