How would the declaration of a liquidating dividend by a corporation affect each of the following? Contributed Total Stock-
Capital holders' Equity
A) No effect Decrease
B) Decrease No effect
C) No effect No effect
D) Decrease Decrease

Question

Quizplus · Accepted Answer

The declaration of a liquidating dividend by a corporation would decrease both contributed capital and total stockholders' equity. This is because a liquidating dividend is paid when a company is closing or distributing its assets, meaning that it is reducing its capital base and returning value to its shareholders. Therefore, the best choice is D, which indicates that both contributed capital and total stockholders' equity would decrease in response to a liquidating dividend declaration.

How Would the Declaration of a Liquidating Dividend by a Corporation