In a Study Session, a Classmate Makes This Statement "Dividends

question 214

Multiple Choice

In a study session, a classmate makes this statement "Dividends are listed as expenses on the income statement." What is your best response to this statement?

• A) I've been struggling with that concept and I feel that dividends should be shown on the balance sheet as assets.
• B) You are right. Revenues and expenses are shown on the income statement. Dividends are a cost of generating revenues and that makes them an expense. Why else would a corporation pay dividends?
• C) Dividends represent a portion of corporate profits that are paid to the shareholders. They belong on the retained earnings statement.
• D) Dividends are deducted from retained earnings on the balance sheet.

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Definitions:

Job Evaluation Process

A systematic approach to determining the relative worth of jobs within an organization to establish fair pay and grading levels.

Key Procedures

Essential and established methods or steps followed to complete a specific task or to achieve a particular objective within an organization.

Living Wage

A wage that is high enough to maintain a normal standard of living, covering an individual's or family's basic costs of living.

Minimum Wage

The lowest legal hourly pay that employers can compensate workers, set by government law.