The board of directors of a stock corporation may declare dividends out of the unrestricted retained earnings which shall be payable in cash, property, or in stock to all stockholders on the basis of outstanding stock held by them.Group of answer choicesTrueFalse

A majority of the board of directors is sufficient to declare stock dividends.Group of answer choicesTrueFalse

A stock dividend is recorded with a transfer from:Multiple ChoiceContributed capital to retained earnings.Retained earnings to contributed capital.Retained earnings to assets.Contributed capital to assets.Assets to contributed capital.

It refers to the amount of accumulated profits and gains realized out of the normal and continuous operations of the corporation after deducting therefrom distributions to stockholders and transfers to capital stock or other accounts, and which is not appropriated for definite corporate expansion projects or programs, not covered by a restriction for dividend declaration under a loan agreement, and not required to be retained under special circumstances obtaining in the corporation, such as when there is a need for a special reserve for probable contingencies.Group of answer choicesStock dividendsBonded indebtednessCash dividendsUnrestricted retained earnings

Dividend policy of a firm is governed by:(i) Long Term Financing Decision:As we know that one of the financing options is ‘Equity’. Equity can either be raisedexternally through issue of new equity shares or can be generated internally throughretained earnings. For Equity, retained earnings are preferable because they do notinvolve any floatation costs (issue expenses).But whether to retain or distribute the profits, forms the basis of this decision.Further, payment of cash dividend reduces the amount of funds required to financeprofitable investment opportunities thereby restricting its financing options.In this backdrop, the decision is based on the following:1. Whether the organization has opportunities in hand to invest the profit,if retained?2. Whether the return on such investment (ROI) will be higher than theexpectations of shareholders i.e. Ke?

A dividend is that part or portion of the profits of a corporation set aside, declared and ordered by the directors to be paid to the stockholders on demand or at a fixed time.Group of answer choicesTrueFalse