At the End of the Year a Company Declared a Final

question 1

Multiple Choice

At the end of the year a company declared a final cash dividend out of its retained earnings. Which of the following is the journal entry to record the declaration?

• A) Dr Cash; Cr Final dividend payable
• B) Dr Final dividend payable; Cr Cash
• C) Dr Share capital; Cr Final dividend payable
• D) Dr Retained earnings; Cr Final dividend payable

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Definitions:

Economic Life

The estimated period over which an asset is expected to be productive or useful in generating revenue.

Patent Rights

Legal protections granted to inventors or assignees, giving them exclusive rights to use and commercialize their inventions for a certain period.

Double-Declining-Balance

A method of accelerated depreciation where an asset loses value at double the rate of its straight-line depreciation.

Units-Of-Activity

A method for allocating depreciation based on the actual usage, work, or units of production of the asset, rather than passage of time.