The Dividends Account Is Closed by an Entry Crediting Retained

question 51

True/False

The Dividends account is closed by an entry crediting Retained Earnings and debiting Net Income.

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Definitions:

Compromise Policy

A policy approach that aims to find a middle ground or agreement between differing parties, especially in legislative or corporate settings.

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.

Growth Opportunities

Prospects or opportunities for a business or investment to expand, leading to increased profits.

Homemade Dividend

A concept where investors sell a portion of their portfolio to create cash flow, as an alternative to receiving dividends from investments.