When a Cash Dividend Is Declared, What Accounts on the Financial

question 62

Multiple Choice

When a cash dividend is declared, what accounts on the financial statements are affected?

• A)Dividend expense and retained earnings
• B)Dividend expense and dividends payable
• C)Cash and retained earnings
• D)Dividends payable and retained earnings

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Definitions:

Good Faith

The honest intention to act without taking an unfair advantage over another party, often a requirement in contract law.

Fair Dealing

A legal doctrine aimed at ensuring fairness in commercial transactions and preventing unethical behavior, often involving the honest and straightforward conduct of parties in a transaction.

Partially Melted

A state or condition where an object or substance is in the process of changing from a solid to a liquid but has not completely transformed.

Air Conditioner

A device used to regulate the temperature, humidity, and purity of the air in a room or building.