How Will the Declaration and Distribution of a 10 Percent

question 101

Multiple Choice

How will the declaration and distribution of a 10 percent stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity,respectively?

• A)Decrease and no effect
• B)No effect and no effect
• C)Decrease and decrease
• D)No effect and decrease

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Definitions:

Mortgage Payable

A long-term liability representing borrowed funds secured by the pledge of property, to be repaid within a specified period.

Installment Payment

A method of paying for goods or services over a period of time in regular, scheduled payments.

Straight-Line Method

A depreciation method that allocates an equal amount of depreciation each year over the useful life of the asset.

Call Price

The price at which an issuer can redeem a bond before its maturity date.