Which of the following statements is true when appropriating retained earnings?

A) Appropriating retained earnings will increase the number of shares of stock available.
B) Appropriating retained earnings will allow the corporation to use its assets for dividends.
C) Appropriating retained earnings will increase cash and other assets.
D) Appropriating retained earnings will divide the retained earnings into two categories.

Question

Mahnoor Nadeem · Accepted Answer

Final Answer : D, Explanation :  Appropriating retained earnings involves dividing retained earnings into two categories: those that are available for dividend distribution and those that are assigned for specific purposes, such as future expansion or debt repayment. It does not directly affect the number of shares, increase cash or other assets, or allow the use of assets for dividends.

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