Chapter 9 Concepts

Question 1

When the board of directors announces a dividend, it commits to pay shareholders a dividend on a specified future date

Answer 1

Declaration Date

Question 2

the company identifies all shareholders of record who will be legally entitled to receive the dividend; there is no accounting entry recorded on this date

Answer 2

Record Date

Question 3

the date the dividends are actually paid to investors

Answer 3

Payment Date

Question 4

a distribution of 25% or less of previously outstanding shares

Answer 4

Small Stock Dividend

Question 5

It is recorded by capitalizing retained earnings for an amount equal to the _____ of the shares

For Small Stock Dividend

Answer 5

Market Value

Question 6

a distribution of more than 25% of previously outstanding shares.

Answer 6

Large Stock Dividend

Question 7

It is recorded by capitalizing retained earnings for an amount equal to the _____ of the shares.

For Large Stock Dividend

Answer 7

Par Value / Stated Value

Question 8

• Results in a reduction in the par or stated value per share.
• Retained Earnings, Common Stock, and Paid-in Capital in Excess of Par accounts do not change
• no journal entries are required

Answer 8

Stock Splits

Question 9

(Net Income – Preferred Dividends) ÷ Weighted Average # of Common Shares Outstanding

Answer 9

Basic Earnings Per Share