After satisfying obligations to creditors, the government, and preferred stockholders, any remaining earnings will most likely be allocated to any of the following EXCEPT
A) retention by the firm for future investment.
B) common shareholders as cash dividends.
C) common shareholders as stock dividends.
D) a combination of retained earnings and cash dividends.

Question

Quizplus · Accepted Answer

Stock dividends do not involve the allocation of earnings; they are a distribution of additional shares to shareholders, not a distribution of earnings.

After Satisfying Obligations to Creditors, the Government, and Preferred Stockholders