ACC 304 All Assignments ACC 304 All Assignments | Page 34

11. Participating preferred stock requires that if a company fails to
pay a dividend in any year, it must make it up in a later year before
paying any common dividends.
12. Callable preferred stock permits the corporation at its option to
redeem the outstanding preferred shares at stipulated prices.
13. The laws of some states require that corporations restrict their
legal capital from distribution to stockholders.
14. The SEC requires companies to disclose their dividend policy in
their annual report.
15. All dividends, except for liquidating dividends, reduce the total
stockholders’ equity of a corporation
16. Dividends payable in assets of the corporation other than cash
are called property dividends or dividends in kind.
17. When a stock dividend is less than 20-25 percent of the common
stock outstanding, a company is required to transfer the fair value of
the stock issued from retained earnings.