When a Company Pays Dividends

question 107

Multiple Choice

When a company pays 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:

Economic Profits

Profits calculated after considering both explicit and implicit costs, representing the total opportunity costs.

Loses

Refers to the situation where expenses surpass revenues, resulting in negative financial performance.

Long-Run Monopolistically Competitive Equilibrium

The condition in which firms in a monopolistically competitive market earn just enough revenue to cover all costs, including a normal profit, in the long term.

Enter Market

The act of beginning to offer goods or services in a particular marketplace.