A Double Rule Applied to Accounts in the Ledger During

question 131

Multiple Choice

A double rule applied to accounts in the ledger during the closing process implies that

• A) the account is an income statement account.
• B) the account is a statement of financial position account.
• C) the account balance is not zero.
• D) a mistake has been made, since double ruling is prescribed.

---

Definitions:

Retained Earnings

The portion of a company's net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

Constant Growth

A model assuming that a company's dividends will continue to grow at a constant rate indefinitely, used in valuing stocks.

Preferred Stock

A class of stock that has a higher claim on assets and earnings than common stock, often with fixed dividends.

Annual Dividend

The total amount of money paid to shareholders from a company's profits over the course of a year per share of stock.