Pear Inc Declared and Paid a $10,000 Dividend at the End

question 62

Multiple Choice

Pear Inc declared and paid a $10,000 dividend at the end of the year.How would the transaction be recorded?

• A)Dr.Expense $10,000, Cr.Cash $10,000
• B)Dr.Expense $10,000, Cr.Retained earnings $10,000
• C)Dr.Retained earnings $10,000, Cr.Expenses $10,000
• D)Dr.Retained earnings $10,000 Cr.Cash $10,000

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Definitions:

Absorption Costing

A cost calculation method within accounting that assimilates all expenses incurred during manufacturing, covering direct materials, direct labor costs, and all overheads, whether fixed or variable, into the product’s price.

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, detailing net profit or loss.

Variable Manufacturing Costs

Costs that change in proportion to the level of production output, such as raw materials and direct labor costs.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overheads - in the cost of a product.