Dividends Are Considered an Expense in Running the Business and Reported

question 120

True/False

Dividends are considered an expense in running the business and reported in the income statement.Dividends are a distribution of resources to owners and not considered a cost in running the business to produce revenues.Dividends are reported in the statement of stockholders' equity.

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Definitions:

Fixed Expenses

Recurring costs that remain relatively constant regardless of business activity levels, including property leases and insurance premiums.

High-low Method

An approach to estimating the fixed and variable components of costs by analyzing the highest and lowest levels of activity.

Variable Cost

Costs that change in proportion to the level of production or sales volume, such as raw materials and direct labor.

Machine-hour

A unit of measure representing the operation of a machine for one hour, often used to allocate manufacturing overhead.