Paying a Previous Dividend Due to the Company's Stockholders Would

question 94

Multiple Choice

Paying a previous dividend due to the company's stockholders would include a debit to:

• A)Cash and a credit to Dividends.
• B)Dividends Payable and a credit to Cash.
• C)Retained Earnings and a credit to Cash.
• D)Accounts Payable and a credit to Retained Earnings.

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Definitions:

Quality Of Income Ratio

A ratio that measures the proportion of income generated from the core operations of a business.

Operating Assets

Assets used by a company in its daily operations to generate income, including machinery, buildings, and equipment.

Revenue Recognition

The accounting principle that determines the specific conditions under which income becomes realized or earned as revenue.

Quality Of Income Ratio

A financial metric assessing the proportion of income that is realized in cash, indicating the reliability of reported earnings.