If Idaho Company Has Paid Out More in Dividends Than

question 146

Multiple Choice

If Idaho Company has paid out more in dividends than it has had in net income, over the lifetime of the company, then the balances in the Stockholders' Equity should show:

• A) a credit balance in the common stock account.
• B) a credit balance in the Retained Earnings account.
• C) a debit balance in the Common Stock account.
• D) a debit balance in the Retained Earnings account.

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Definitions:

Treasury Stock

Shares that were issued and subsequently reacquired by the company, held in the company's treasury, and are not considered when calculating earnings per share or dividends.

Bonds Payable

A form of long-term debt issued by corporations or governments that promises to pay the bondholder a specified sum of money at future dates.

Consolidated Income Statement

A financial statement that aggregates the income and expenses of a parent company and its subsidiaries, presenting a unified financial performance.

Interest Expense

The cost incurred by an entity for borrowed funds, typically recognized on the income statement.