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 the board of directors authorizes a distribution of cash to its investors, this is known as:

Issuing new shares

Repurchasing stock

Declaring a cash dividend

Recording a stock split

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Verified step by step guidance

Understand the concept of a cash dividend: A cash dividend is a payment made by a corporation to its shareholders, typically as a distribution of profits. It is authorized by the board of directors.

Differentiate between the options provided: Issuing new shares refers to creating and selling additional shares of stock, repurchasing stock involves buying back shares from investors, and recording a stock split is the process of dividing existing shares into multiple shares to increase liquidity.

Focus on the term 'declaring a cash dividend': This occurs when the board of directors formally approves the distribution of cash to shareholders. It is a key step in the dividend process.

Recognize the role of the board of directors: The board is responsible for making decisions about dividends, including the amount and timing of the distribution.

Conclude that the correct answer is 'Declaring a cash dividend,' as it directly aligns with the description of authorizing a distribution of cash to investors.