The Major Accounting Difference Between Interest Expense for Creditors and Dividends

question 45

Multiple Choice

The major accounting difference between interest expense for creditors and dividends declared and paid to shareholders is that interest expense:

• A)decreases retained earnings and dividends increase retained earnings.
• B)impacts cash flows, while dividends do not.
• C)is not on the income statement while dividends declared and paid are.
• D)is on the income statement and dividends declared and paid are not.

---

Definitions:

Single Parents

Individuals who are raising children without the involvement of the other parent in the home.

Poverty

The state of having insufficient financial resources or material possessions for a minimum standard of living.

Occupation

A person's principal work or business, especially as a means of earning a living; a profession or job.

Income

Monetary gain derived from work, investments, or social benefits, serving as a measure of economic well-being and resource availability for individuals or households.