Indicate on the Blanks Below the Net Effect (I =

question 152

Short Answer

Indicate on the blanks below the net effect (I = increase, D = decrease, NE = no effect) of each of the following entries on working capital.
_____ 1. To record the declaration of a cash dividend
_____ 2. To record the payment of a previously declared and recorded cash dividend
_____ 3. To close the Dividends account at the end of the accounting period

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Definitions:

Activity Level

Refers to the volume of production or services performed in a business, which can significantly influence costs and profitability.

Relevant Range

The range of activity over which changes in cost are of interest to management.

Cost Behavior

Cost behavior refers to how a company's costs change in response to variations in its level of activity or production volume, categorized into fixed, variable, and mixed costs.

Management Decision-Making

The process by which upper-level management makes strategic choices to steer the direction of a company's operations or policies.