Indicate Whether Each of the Following Statements Is True or False

question 52

Short Answer

Indicate whether each of the following statements is true or false.
_____ a)An appropriation of retained earnings limits the amount available for dividends.
_____ b)Appropriating retained earnings is considered an asset exchange transaction.
_____ c)An appropriation is recorded as a debit to the appropriated retained earnings account and a credit to retained earnings.
_____ d)One reason for an appropriation of retained earnings is that there may be restrictive covenants in credit agreements.
_____ e)An appropriation has no effect on the accounting equation.

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Definitions:

Debit

A financial record that leads to a rise in assets or a reduction in liabilities on the balance sheet of a company.

Credit Accounts

Accounts within financial accounting that are increased with a credit entry, carrying a balance that could be beneficial (revenue, gains) or detrimental (liabilities, expenses).

Journal Entry

A record in accounting that logs the debit and credit parts of a transaction in the financial records of a company.

Journal

A record where all financial transactions are initially recorded, using debits and credits, before being posted to individual accounts.