In Order to Close the Dividends Account, the

question 121

Multiple Choice

In order to close the dividends account, the

• A)income summary account should be debited.
• B)income summary account should be credited.
• C)retained earnings account should be credited.
• D)retained earnings account should be debited.

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Definitions:

Dividend

A portion of a company's earnings that is paid to shareholders, usually on a quarterly basis.

Nominal Rate of Interest

The rate of interest before adjustments for inflation, reflecting the face-value rate of interest paid on a loan or received from an investment.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time.

Purchasing Power

The worth of a currency depicted by the quantity of goods or services that can be purchased with one unit of the currency.