Declaring and Paying Dividends Causes an Increase in Both Assets

question 122

True/False

Declaring and paying dividends causes an increase in both assets and stockholders' equity for the corporation.

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Definitions:

Balance Sheet

A statement of finances that shows the assets, liabilities, and equity of shareholders of a corporation at a certain moment.

Revenue Account

An account that tracks the income earned from normal business operations, such as sales of goods or services, distinguished from other types of income.

Withdrawal Account

A withdrawal account is an account in a partnership or sole proprietorship from which an owner can withdraw his or her share of the business profits.

Closing Process

The closing process involves summarizing revenue and expense accounts and transferring net income or loss to owner's equity to prepare the company's books for the next accounting period.