The Journal Entry to Record the Declaration of Dividends on Ordinary

question 103

True/False

The journal entry to record the declaration of dividends on ordinary shares includes a debit to Retained Earnings and a credit to Ordinary Dividend Payable.

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Definitions:

Direct Method

A method of presenting the operating activities section of the statement of cash flows that reports components of cash flows from operating activities as gross receipts and gross payments.

Accounts Receivable

Represents money owed to a company by its customers for goods or services delivered but not yet paid for.

Indirect Method

A way of calculating cash flows for operational activities by starting with net income and adjusting for non-cash transactions.

Net Income

The total profit of a company after all expenses, including taxes and interest, have been deducted from revenues.