Question : 111. Jurisdiction-specific corporate laws limit directors’ freedom to declare dividends. Without : 1230392

111. Jurisdiction-specific corporate laws limit directors’ freedom to declare dividends. Without these limits, directors might dissipate the firm’s assets for the benefit of  A. common shareholders, harming other nonshareholding stakeholders. B. creditors, harming other stakeholders.C. employees, harming other stakeholders.D. management, harming other stakeholders.E. customers, harming other stakeholders.

112. Contracts with bondholders, other lenders, and preferred shareholders often limit dividend payments and thereby compel the retention of earnings. Which of the following is/are true? A. A bond contract may require that total liabilities not exceed the total amount of shareholders’ equity.B. A bond contract may require that firms retire debt “out of earnings.” C. A bond contract’s provisions may involves curtailing dividends so that the necessary debt service payments, plus any dividends, do not exceed the amount of earnings for the period. D. Financial statement notes must disclose significant limitations on dividend declarations.E. all of the above

113. Directors usually declare dividends less than the legal maximum and thereby allow retained earnings to increase as a matter of corporate financial policy for what reason(s)? A. Available cash did not increase by as much as the amount of earnings, so paying the maximum legally permitted dividends would require raising more cash. B. Restricting dividends in prosperous years may permit continued level or steadily growing dividend payments in poor years. C. The firm may need funds for expansion of working capital or for plant and equipment. D. The firm can distribute the funds to shareholders with lower tax burdens for them by using the cash to repurchase shares. E. all of the above

114. Directors usually declare dividends less than the legal maximum and thereby allow retained earnings to increase as a matter of corporate financial policy.  Which of the following is not a valid reason for this practice? A. Available cash did not increase by as much as the amount of earnings, so paying the maximum legally permitted dividends would require raising more cash. B. Restricting dividends in prosperous years may permit continued level or steadily growing dividend payments in poor years. C. The firm may need funds for expansion of working capital or for plant and equipment. D. The firm can distribute the funds to shareholders with lower tax burdens for them by using the cash to repurchase shares. E. The firm can distribute steadily growing dividend payments to shareholders thereby increasing the market value of the firm’s common stock and increasing the earnings multiple that investors apply.

115. Corporations sometimes distribute assets other than cash when paying a dividend.  Which of the following is true? A. Such a dividend is known as a dividend in kind or a property dividend. B. The accounting for property dividends resembles that for cash dividends, except that when the firm pays the dividend, it credits the asset given up, rather than Cash. C. The amount debited to Retained Earnings equals the fair value of the assets distributed. D. When this fair value differs from the carrying value of the assets distributed, the firm recognizes a gain or loss in net income.E. all of the above

116. Corporations sometimes distribute assets other than cash when paying a dividend.  Which of the following is not true? A. Such a dividend is known as a dividend in kind. B. Such a dividend is never known as a property dividend. C. The amount debited to Retained Earnings equals the fair value of the assets distributed. D. When this fair value differs from the carrying value of the assets distributed, the firm recognizes a gain or loss in net income.E. The accounting for property dividends resembles that for cash dividends, except that when the firm pays the dividend, it credits the asset given up, rather than Cash.

117. Corporations sometimes distribute assets other than cash when paying a dividend.  Which of the following is not true? A. Such a dividend is sometimes known as a dividend in kind. B. Such a dividend is sometimes known as a property dividend. C. The amount debited to Retained Earnings equals the fair value of the assets distributed. D. When this fair value differs from the carrying value of the assets distributed, the firm does not recognizes a gain or loss in net income.E. The accounting for property dividends resembles that for cash dividends, except that when the firm pays the dividend, it credits the asset given up, rather than Cash.

118. The stock dividend relabels a portion of the retained earnings that had been legally available for dividend declarations as a more permanent form of shareholders’ equity, because  A. the firm has used some funds represented by past earnings to expand plant facilities or to replace assets at increased prices or to retire bonds. B. the firm does not have this cash available for cash dividendsC. the stock dividend does not affect the availability of cash on hand or cash that the firm has already invested; rather, the stock dividend signals to readers of the balance sheet, perhaps more clearly than before, the commitment to investment. D. all of the aboveE. none of the above

119. Stock dividends  A. have little economic substance for shareholders.B. result in a proportionate increase in the number of shares held by each shareholder, but does not change that shareholder’s ownership interest or proportionate voting power.C. result in decreases to book value per common share, but each shareholder has a proportionately larger number of shares, so the total book value of each shareholder’s interest remains unchanged. D. result in the decline of market value per share should be commensurate with the proportional increase in shares, but all else equal, the total market value of an individual’s shares should not change. E. all of the above

120. Which of the following is not true regarding the issuance of a stock dividend? A. The stock dividend has little economic substance for shareholders.B. The stock dividend does not change each shareholder’s ownership interest or proportionate voting power.C. The stock dividend results in decreases to book value per common share, but the total book value of each shareholder’s interest remains unchanged. D. The total market value of an individual’s shares should not change. E. The stock dividend does not change the number of shares each shareholder owns.