37 The payment of a previously declared cash dividend has an overall effect of: A Reducing retained earnings and reducing liabilities by the amount...

37 The payment of a previously declared cash dividend has an overall effect of:

A Reducing retained earnings and reducing liabilities by the amount of the dividend.

B Reducing retained earnings and increasing contributed capital by the same amount.

C Reducing assets and reducing liabilities by the amount of the dividend.

D Reducing both assets and retained earnings by the amount of the dividend.

38 Which of the following statements is correct?

A The dividend yield and earnings per share both have the same denominator.

B The dividend yield and earnings per share both have the same numerator.

C Dividends per share are used in calculation of both earnings per share and dividend yield.

D Net income is used in the calculation of earnings per share but not in the calculation of dividend yield.

39 Which of the following transactions increases the quality of income ratio?

A The cash payment of an account payable.

B The payment of a cash dividend.

C A decrease in receivables.

D The accrual of revenue.

40 Which of the following correctly describes the effect of declaring and distributing a common stock dividend?

A Total stockholders' equity decreases.

B Total stockholders' equity remains the same.

C The number of shares outstanding increases while the par value of each share decreases.

D The number of shares outstanding decreases while the par value of each share increases.

41 Assume the following capital structure:Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for three prior years (2011-2013).Common stock, $100 par value, 2,000 shares issued and outstanding.Total dividends declared and paid in 2014 were $50,000. How much of the 2014 dividend will be paid to the common stockholders assuming the preferred stock is cumulative?

A $12,000.

B $50,000.

C $47,000.

D $38,000.

42Which of the following ratios is not considered to be a test of profitability?

A Current ratio.

B Profit margin.

C Return on assets.

D Earnings per share.