When a Portion of Stockholders' Original Investment Is Returned in the Form

question 29

Multiple Choice

When a portion of stockholders' original investment is returned in the form of a dividend,it is called a

• A) compensating dividend.
• B) liquidating dividend.
• C) property dividend.
• D) equity dividend.

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Definitions:

Shares

Units of ownership interest in a corporation or financial asset, which provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing owners' claims against the company's assets.

Common Stock Dividend

A portion of a company's earnings distributed to holders of its common stock, typically in the form of cash or additional shares.

Treasury Stock

Shares that were once outstanding and have been reacquired by the corporation, reducing the number of shares available on the open market.