Smart Consulting, Paid Cash Dividends of $2,000 to Its Common $\begin{array}{|l|r|l|}\hline \text { Dividends } & 2,000 & \\\hline \text { Cash } & & 2,000 \\\hline\end{array}$

question 208

Multiple Choice

Smart Consulting, paid cash dividends of $2,000 to its common stockholders. Identify the general journal entry below that Smart Consulting will make to record the transaction.

• A) \(\begin{array}{|l|r|l|}
• \hline \text { Dividends } & 2,000 & \\
• \hline \text { Cash } & & 2,000 \\
• \hline
• \end{array}\)
• B) \(\begin{array}{|l|l|l|}
• \hline \text { Common Stock } & 2,000 & \\
• \hline \text { Cash } & & 2,000 \\
• \hline
• \end{array}\)
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Dividends } & 2,000 \\
• \hline \text { Cormunon Stock } & & 2,000 \\
• \hline
• \end{array}\]
• D) \(\begin{array}{|l|r|l|}
• \hline \text { Cash } & 2,000 & \\
• \hline \text { Common Stock } & & 2,000 \\
• \hline
• \end{array}\)
• E) \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 2,000 \\
• \hline \text { Dividends } & & 2,000 \\
• \hline
• \end{array}\]

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Definitions:

Rent Expense

An operating expense incurred for the use of property or equipment, recognized over the period of the lease agreement.

Capital Lease

A lease agreement that allows a lessee to use an asset in exchange for payment, with terms that transfer substantially all risks and benefits of ownership.

Operating Leases

Leases used for short-term leasing of assets, where the lessee does not assume the risk of ownership, and the asset will be returned to the lessor at the end of the lease term.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets to generate sales revenue, calculated by dividing sales revenue by the average total assets.