FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- What does it mean when preferred stock has a cumulative feature? A.A dividend must be paid to the preferred stockholders each year. B. A dividend cannot be paid to the common stockholders. C. If dividends were not paid to preferred stockholders in previous years, these dividends must be paid before any dividends are paid to the common stockholders. D. The stockholders have the right to share in extra dividends. Please explain why the option is correct and remaining incorrect in detail explain each and every option in detail with explanationarrow_forwardDiluted earnings per share shows dilution resulting from additional shares that may be issued for stock options or bonds that may be converted to shares of common stock in the future. True Falsearrow_forwardThe par value of a stock reflects the most recent market price. is immaterial in the majority of cases. O is selected by the SEC. O is indicative of the worth of the stock.arrow_forward
- Which of the following results in increasing basic earnings per share? Select one: a. Paying more than carrying value to retire outstanding bonds. b. Issuing cumulative preferred stock. c. Repurchase of common shares. d. Issuing a 2:1 stock split. e. All of these increase basic earnings per share.arrow_forwardAccording to the basic Dividend Discount model, the value an investor should assign to a share of stock is dependent on the length of time he or she plans to hold the stock. Is the above statement True or False? Please Explain.arrow_forwardUse the information given to fill out missing boxes correctlyarrow_forward
- Which of the following show the proper effect of a stock split and a stock dividend? Stock Dividend Item Total paid-in capital Item Par value per share Item Total retained earnings Item Total par value (common) Stock Split Increase Stock Split Decrease Stock Split Decrease Stock Split Decrease Increase Stock Dividend No change Stock Dividend Decrease Stock Dividend Increasearrow_forwardPrepare a journal entry that summarizes the declaration and distribution of the stock split if it is not to be effected in the form of a stock dividend. What is the par per share after the split?arrow_forwardThe journal entry to record a stock dividend causes the Common Stock account to increase. True Falsearrow_forward
- Cumulative preferred stock O requires dividends in arrears to be paid before the firm can pay dividends on common. O has a right to vote cumulatively. O has a claim to dividends before bonds. Ohas a higher required return than common stock.arrow_forwardIf a company’s outstanding shares are increased through a stock dividend or a stock split, how would that alter the presentation of its EPS data?arrow_forwardb. Cash Common Stock Paid-in Capital in Excess of Par - Common Stock Preferred Stock Paid-in Capital in Excess of Par - Preferred Stockarrow_forward
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