Question

01.before paying a cash dividend, which of the following is unnecessary for a corporation? a.adequate cash...

01.before paying a cash dividend, which of the following is unnecessary for a corporation?

a.adequate cash

b.declaration of dividends by the board of directors

c.retained earnings

d.approval of stockholders

2.retained earnings is increased by each of the following except

a.net income

b.some disposals of treasury stock below cost

c.prior period adjustments

d.all of these increase retained earnings

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Answer #1

Answer of First Question:

For paying a cash dividend option (d) approval of stockholders is not required or is unnecessary for a corporation.

Option (a), (b), (c) are not correct since cash and retained earning are required to pay cash dividend and also declaration of dividends by the board of directors is necessary for paying dividend in a company.

Answer of Second Question:

Retained earning is increased by each of the following except option (c) prior period adjustments ,since prior period adjustments are nothing but necessary changes or correction that must be made to the assets or liabilities.The prior period adjustments should not affect the current period, and hence also sometimes decreasing the retained earnings.

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