The Reason That Both Expenses and Dividends Are Recorded by Debit

question 90

Multiple Choice

The reason that both expenses and dividends are recorded by debit entries is that:

• A)All dividend and expense transactions involve offsetting credit entries to the Cash account.
• B)Both expenses and dividends are offset against revenues in the income statement.
• C)Both expenses and dividends reduce owners' equity.
• D)The statement is untrue-expenses are recorded by debits,but dividends are recorded by credits to the owners' equity account.

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Definitions:

Reserve Ratio

The fraction of depositors' balances that banks must have on hand as cash, a requirement set by central banking authorities.

Gold Coins

Metal currency minted from gold, historically used as both a medium of exchange and store of value.

Receipts

Documents that acknowledge the receipt of goods or services or the receipt of money, often serving as proof of transaction.

Debit Card

A card used for purchases that directly debits funds from the user's bank account.