A Company Declares a Dividend of $0

question 64

Multiple Choice

A company declares a dividend of $0.75 per share on 12 500 shares of ordinary shares. Which of the following would be included in the entry to record the declaration?

• A)Retained earnings would be credited for $9 375.
• B)Retained earnings would be debited for $9 375.
• C)Share capital would be credited for $9 375.
• D)Dividends payable would be debited for $9 375.

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Definitions:

Equity Accounted Balance

A valuation method used in accounting for investments, where the investment is initially recognized at cost and subsequently adjusted for the investor’s share of the investee’s net assets changes, including profits and losses.

Profit/(Loss)

The financial result of a business's operations for a specific period, calculated as income minus expenses. If positive, it's a profit; if negative, a loss.

Equity Accounted Balance

A valuation method for the recognition of investments in associates, where the investment is initially recorded at cost and adjusted for the investor’s share of the net profit or loss of the investee.

Profit/(Loss)

The financial result of a company's operations and activities over a specific period, indicating net earnings or losses.