When a Company Distributes Dividends

question 137

Multiple Choice

When a company distributes dividends

• A) it doesn't have to be cash, it could be another asset.
• B) the dividends account will be increased with a credit.
• C) the retained earnings account will be directly increased with a debit.
• D) the dividends account will be decreased with a debit.

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Definitions:

Negative Equity

Occurs when the value of an asset falls below the outstanding balance on the loan used to purchase that asset.

Drawee

A person on whom a draft is drawn by the drawer.

Checking Account

A bank account from which money can be withdrawn or deposited, often used for daily transactions such as paying bills or receiving payroll deposits.

Drawer

The maker of a draft.