Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Dividends and Dividend Preferences

Financial Accounting

12. Stockholders' Equity

Dividends and Dividend Preferences

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Multiple Choice

Of the following dividend options, which of these is generally taxable to shareholders?

Cash dividends

Stock dividends

Stock splits

Return of capital

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Verified step by step guidance

Understand the concept of dividends: Dividends are payments made by a corporation to its shareholders, typically as a distribution of profits. They can take various forms, such as cash dividends, stock dividends, stock splits, or return of capital.

Analyze the tax implications of cash dividends: Cash dividends are generally taxable to shareholders as ordinary income in the year they are received. This is because they represent a distribution of the company's earnings.

Examine stock dividends: Stock dividends involve issuing additional shares to shareholders instead of cash. These are typically not taxable at the time of issuance unless the shareholder has the option to receive cash instead of stock.

Review stock splits: Stock splits increase the number of shares outstanding while reducing the price per share proportionally. Stock splits are not taxable because they do not represent a distribution of earnings or profits.

Understand return of capital: Return of capital occurs when a company returns part of the shareholder's original investment rather than distributing profits. This is generally not taxable but reduces the shareholder's cost basis in the investment.