--%>

Capitalize earnings

To transfer amounts from retained earnings to contributed capital through stock dividends. The effect is to decrease retained earning and increase the stock account. Stock dividends also permanently retain the earnings in the corporation by moving it out of the retained earnings account-which is used for dividend payments-and into the contributed capital section of the balance sheet. To reduce the contributed capital, the corporation would declare liquidating dividends 

 

   Related Questions in Financial Accounting

  • Q : Political risk in capital budgeting How

    How would you include political risk within the capital budgeting process of foreign investment projects?

  • Q : Meaning of Bill and Hold What is the

    What is the meaning of Bill and Hold in Accounting? Briefly describe it.

  • Q : Ihi Which of the following adjustments

    Which of the following adjustments is an example of an accrual adjustment? an asset/expense adjustment involving depreciation an asset/expense adjustment involving insurance a liability/expense adjustment involving utility expenses a liability/revenue adjustment involving unearned revenues

  • Q : Double taxation Specify some of the

    Specify some of the methods taxing authorities utilize to remove or diminish evil of double taxation?

  • Q : Trading A CD/$ bank trader is presently

    A CD/$ bank trader is presently quoting a small figure bid-ask of 35-40, while rest of the market is trading at the CD1.3436-CD1.3441.  Specify what all is implied about trader’s beliefs by his prices?

  • Q : Parallel and back-to-back loan

    Distinguish between the parallel loan and the back-to-back loan.

  • Q : Deviations from purchasing power parity

    Explain about deviations from purchasing power parity for countries competitive positions within the world market.

  • Q : Modigliani-Miller equation In

    In Modigliani-Miller equation, why is market value of the levered firm is more than the market value of an equivalent unlevered firm?

  • Q : Types of international bond market

    List the important types of the international bond market instruments.

  • Q : Asset-allocation funds Mutual funds

    Mutual funds that hold both bonds and stocks. Some asset-allocation funds follow specified allocation percentages and others take advantage of current condition. Those that take advantage of current condition is higher risk, because the fund manager tries to adjust the allocations to take advanta