Question: 1. Why is the term liquidating dividend used to describe cash dividends debited against paid-in capital accounts?
2. In what ways does preferred stock often have priority over common stock?
3. How does declaring a stock dividend affect the corporation's assets, liabilities, and total equity? What are the effects of the eventual distribution of that stock?
4. What is the difference between a stock dividend and a stock split?
5. Courts have ruled that a stock dividend is not taxable income to stockholders. What justifies this decision?