A Corporation Should Account for the Declaration of a 10

question 97

Multiple Choice

A corporation should account for the declaration of a 10 percent stock dividend by

• A)transferring from retained earnings to contributed capital an amount equal to the legal capital represented by the dividend shares.
• B)transferring from retained earnings to contributed capital an amount equal to the market value of the dividend shares.
• C)transferring from retained earnings to contributed capital whatever amount the board of directors deems appropriate.
• D)making only a memorandum entry in the general journal.

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Definitions:

Saving

The portion of income not spent on consumption, often set aside for future investments or expenditures.

Disposable Income

The amount of money individuals or households have available to spend or save after taxes have been accounted for.

Saving

The portion of income that is not spent on consumption but instead is set aside for future use or investment.

Disposable Income

Income left for households to direct into savings and spending after deductions of income taxes.