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.
18. Stock splits and large stock dividends have the same effect on a company’ s retained earnings and total stockholders’ equity.
19. The rate of return on common stock equity is computed by dividing net income by the average common stockholders’ equity.
20. The payout ratio is determined by dividing cash dividends paid to common stockholders by net income available to common stockholders.
True-False Answers— Conceptual