ACC 304 Course Great Wisdom / tutorialrank.com ACC 304 Course Great Wisdom / tutorialrank.com | Page 329

17. When a stock dividend is less than 20-25 percent of the
common stock outstanding, a company is required to transfer the
fair value of the stock issued from retained earnings.

18. Stock splits and large stock dividends have the same
effect on a company’s retained earnings and total stockholders’
equity.

19. The rate of return on common stock equity is computed
by dividing net income by the average common stockholders’
equity.

20. The payout ratio is determined by dividing cash
dividends paid to common stockholders by net income available
to common stockholders.