Asked by Latroy Mayfield on Jun 05, 2024
Verified
The declaration of cash dividends increases retained earnings.
Cash Dividends
Payments made by a corporation to its shareholders from its profits in the form of cash.
Retained Earnings
The portion of a company's profits not distributed as dividends to shareholders, instead reserved for reinvestment in the business or to pay off debt.
- Grasp the accounting and financial implications of declaring and paying dividends on stockholders’ equity and retained earnings.
Verified Answer
NE
Nor Effendi OthmanJun 11, 2024
Final Answer :
False
Explanation :
The declaration of cash dividends actually decreases retained earnings because it represents a distribution of earnings to shareholders.
Learning Objectives
- Grasp the accounting and financial implications of declaring and paying dividends on stockholders’ equity and retained earnings.