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Which of the following will decrease Retained Earnings for a corporation? a. declaring a...

Question:

Which of the following will decrease Retained Earnings for a corporation?

a. declaring a dividend.

b. issuing common stock.

c. closing a net income.

d. paying a dividend in cash.

e. purchase of treasury stock.

Retained Earnings

Retained Earnings is an account in the financial statements under the balance sheet or the statement of financial position. It is part of the equity portion where income/loss for the periods are closed.

Answer and Explanation:

Answer: a. declaring a dividend.

Which of the following will decrease Retained Earnings for a corporation?

a. declaring a dividend - declaration of dividend would require a debit on retained earnings account

b. issuing common stock - issuance of common stock has no impact on retained earnings

c. closing a net income - closing a net income would increase retained earnings account

d. paying a dividend in cash - payment of dividends has no effect on retained earnings, only the declaration.

e. purchase of treasury stock. - issuance of common stock has no effect on retained earnings


Learn more about this topic:

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Impact of Dividend Distribution on Retained Earnings

from Accounting 302: Advanced Accounting

Chapter 12 / Lesson 2
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