Which of the Following Statements About Dividends Is Not True

question 93

Multiple Choice

Which of the following statements about dividends is not true?

• A)Dividends represent a sharing of corporate profits with owners.
• B)Both stock dividends and cash dividends reduce retained earnings.
• C)Cash dividends paid to stockholders reduce net income.
• D)Dividends are declared at the discretion of the board of directors.

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Definitions:

Participation in Earnings

A method where stakeholders, usually employees or managers, receive a share of the company's profits, typically based on predetermined criteria.

Non-Controlling Interest

The portion of equity interest in a subsidiary not attributable directly or indirectly to the parent company, reflecting minority shareholders' equity in the subsidiary's net assets.

Shareholders' Equity

The residual interest in the assets of a company after deducting liabilities, representing the ownership equity spread among shareholders.

Entity Approach

A concept in consolidation accounting that treats the group of parent and subsidiary companies as a single reporting entity.