5) A dividend's declaration date is the date the board of directors announces the intention to pay the dividend.
6) The journal entry to record the declaration of a dividend includes a credit to Cash.
7) When a company has issued both preferred and common stock, the preferred stockholders are allocated their dividends first.
8) On November 1, 2013, Oster Company declared a dividend of $3.00 per share. Oster Company has 20,000 shares of common stock outstanding, and no preferred stock. The date of record is November 15, and the payment date is November 30, 2013. No journal entry is made on the date of record.
9) Most preferred stock is non-cumulative.
10) Which of the following is TRUE of dividends?
A) Dividends are a distribution of cash or other assets to the stockholders.
B) Dividends increase assets and decrease total stockholders' equity of a corporation.
C) Dividends decrease paid-in capital.
D) Dividends increase stockholders' equity.
11) A corporation declares a dividend of $.75 per share on 12,500 shares of common stock. Which of the following would be included in the entry to record the declaration?
A) Retained earnings would be debited for $9,375.
B) Paid-in capital in excess of par would be credited for $9,375.
C) Retained earnings would be credited for $9,375.
D) Dividends payable would be debited for $9,375.
12) On which of the following dates do dividends become a liability of a corporation?
A) On the declaration date
B) On the date of record
C) At the end of the fiscal year
D) On the payment date
13) Which of the following would be included in the entry to record the payment of a previously declared dividend of $.25 per share on 12,500 shares of common stock?
A) Retained earnings would be debited for $3,125.
B) Cash would be debited for $3,125.
C) Dividends payable would be credited for $3,125.
D) Dividends payable would be debited for $3,125.
14) Which of the following occurs when a previously declared dividend is paid?
A) Assets increase.
B) Equity increases.
C) Liabilities decrease.
D) Liabilities increase.