Reviews the book "The Secretary's Manual," by Larrae A. Haydon and Cyrus Garnsey.

The statutory laws governing corporate dividends are significant to accountants and teachers of accounting. The directors of a corporation have power, in their discretion, to determine what, if any, dividends shall be declared and paid to stockholders. This is the general statutory rule which applies in all states and territories of the United States and which also prevails in England. The variations from it are few and slight. The rule applies in New Jersey unless otherwise provided in the certificate of incorporation or in by-laws adopted by at least a majority of the stockholders. In England, a company in general meeting may declare dividends, but the amount must not exceed the amount recommended by the directors. The statutes of several jurisdictions give the stockholders power to exert a limited degree of pressure upon the directors in the matter of dividend declaration. In New Mexico and Puerto Rico in United States, unless otherwise provided in the certificate of incorporation, the directors must declare a dividend of the whole of the company's profits exceeding the reserve and pay it to the stockholders on demand.

Reviews the book "Principles of Auditing," by F.R.M. de Paula.

This article discusses the topic of dividends on non-cumulative preferred stock. The development of the corporation into a dominant form of business organization, has added new complications to capital structures such that the problem of preserving a proper balance between the holders of various classes of securities in their competition for income is becoming more and more difficult to solve. The preservation of this balance by the adjustment of relationships among the groups owning corporate shares is an extremely delicate and arduous task for the courts. So far as dividends are concerned, preferred stock may be classified as cumulative and non-cumulative. On the other hand, the holders of non-cumulative preferred stock are entitled to no dividends for any particular year if there are no earnings for that period. A problem arises when profits are sufficient to pay a dividend to this class of shareholders but the board of directors refuses to make a distribution for that year and invests the earnings in fixed improvements or retains them as working capital.