Declaring and paying dividends causes an increase in both assets and stockholders' equity of the corporation

Maxwell was the head cashier of the Amalgamated Merchants Bank. The Excelsior Surety Company bonded Maxwell for $200,000. An internal audit revealed a $1,000 embezzlement by Maxwell. Maxwell persuaded the bank not to report him, and he promised to pay the money back within 10 days. The bank acquiesced and neither the police nor Excelsior was informed of the theft. Maxwell shortly thereafter embezzled $75,000 and fled. Excelsior refuses to pay. Is Excelsior liable? Why?

A. Excelsior is liable since the combined total of the embezzlements is less than the face amount of the surety bond. B. Excelsior is liable for $75,000, but not the $1,000 since a separate arrangement was agreed to by Amalgamated with Maxwell. C. Excelsior is liable since it is a compensated surety and as such assumed the risk. D. Excelsior is not liable since the failure to give notice of the first embezzlement is a valid defense.

A security deposit on furnished residential property can be no more than

a. two months' rent. b. three months' rent. c. a reasonable amount. d. $2,000.