The Earth Shoe Company, whose stock has a market value of $20, has the following common equity accounts on its balance sheet:
Common stock ($1 par, 1,000,000 shares) $ 1,000,000
Paid in excess $14,000,000
Retained earnings $52,000,000
Total Common stockholders' equity $67,000,000
If the firm declares a 5% stock dividend, what will be the retained earnings figure after the dividend
is paid?
A) $1,000,000
B) $51,000,000
C) $14,950,000
D) None of the above
B
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Operating losses incurred during the start-up years of a new business should be
a. accounted for and reported like the operating losses of any other business. b. written off directly against retained earnings. c. capitalized as a deferred charge and amortized over five years. d. capitalized as an intangible asset and amortized over a period not to exceed 20 years.
What is most likely a strategic benefit of the existence of competitors?
A) Competitors seldom lead to product differentiation. B) Competitors help legitimize new technologies. C) Competitors exclusively serve more-attractive segments. D) Competitors fracture the target market. E) Competitors decrease the total demand.