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

When a corporation distributes assets of the company to its investors, it is referred to as a(n):

Capital contribution

Stock split

Retained earnings

Dividend

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Understand the concept of a dividend: A dividend is a distribution of a corporation's earnings or assets to its shareholders, typically in the form of cash or additional stock.

Differentiate between the options provided: Capital contribution refers to funds or assets provided by shareholders to the company, stock split involves dividing existing shares into multiple shares to increase liquidity, and retained earnings are profits kept by the company for reinvestment rather than distribution.

Recognize that dividends are a way for corporations to return value to shareholders, often reflecting the company's profitability and financial health.

Note that dividends reduce retained earnings on the balance sheet, as they represent a payout of accumulated profits.

Conclude that when a corporation distributes assets to its investors, it is classified as a dividend, aligning with the definition provided in the problem.