Question: Explain why paying dividends results in a decrease in retained earnings of a corporation.

Explain why paying dividends results in a decrease in retained earnings of a corporation.

Step by Step Solution

★★★★★

3.42 Rating (183 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Dividends represent a distribution of the assets of an entity to its owners By paying a dividend ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

408-B-A-F-S (4154).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Q:

Explain why paying dividends is not an effective way to shift income from a corporation to its owners.

Q:

a. Describe a year-end adjustment that results in a decrease in liabilities. b. Describe a year-end adjustment that reduces the book value of a long-term asset. c. Describe a year-end adjustment that...

Q:

Why is having enough retained earnings a requirement for paying a cash dividend, even if the company has sufficient cash to make the payment?

Q:

Sorry for the long question but I will rate correct answers, thank you in advance! Question 6-10 Challenge Problem -10. 1. Develop a pro forma income statement and balance sheet for the White &...

Q:

Refer to the following financial statements for the Glove World Company. 5-12 Glove World Company Income Statement For the Year Ended Dec. 31, 2015 Net Sales $11,000 Operating Expenses 3,000...

Q:

Please assist with questions below, thanks. Exercise B Assume that retained earnings increased by USD 3,600 from 2010 June 30, to 2011 June 30. A cash dividend of USD 300 was declared and paid during...

Q:

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) During the fiscal year ended 2016, a company had revenues of $400,000, cost of goods sold of...

Q:

I have to create income statements and balance sheets for 2016 using the 2015 data and using the special instructions in the textbook. White & Pinkman Corporatlo Assets ! Balance Sheet Dec . 31, 2015...

Q:

Attached is a PDF file for Chapter 3 Exercises and Problems. Please complete Exercise 1, 4, and 9 and presentthese exercises and problems in Excel spreadsheet. Thank you! SHORT ANSWER QUESTIONS,...

Q:

I am trying to complete the statement of retained earnings based on the adjusted trial balance. I noticed that the ending Dr balance for June 30, 2017 is less than the ending Cr balance for June 30,...

Q:

When should interviewers probe? Give some examples of how probing should be done.

Q:

You are hired as an investment advisor by Tom Smith. Tom is planning to retire in 25 years and would like to have 2 million dollars at the time of retirement. He is planning to contribute monthly to...

Q:

1 0 ) An investor buys a non - agency mortgage - backed security ( MBS ) . Compared to agency MBS , which of the following risks is most relevant to the investor? A ) Higher prepayment risk B ) Lack...

Q:

The variables pe-ratio, profit, growth and employ are the price earnings ratio for 19 companies (firm) are their associated profit margins, percentage growth rates and number of employees in...

Q:

Compute and interpret the following ratios for Forzani for fiscal years 2008 and 2009. Use these ratios to assess Forzanis liquidity. Be sure to use the information provided from Forzanis January 28,...

Q:

Prepare common size and trend statements from Forzanis balance sheets and statements of operations for fiscal 2007 through 2009. Analyze the statements you prepared to identify any issues you think...

Q:

Refer to the information about Galahad provided in Problem P12-14. You are an investment analyst for Qualicum Investment Group, Inc. (Qualicum). Qualicum raises capital from individual investors and...

Q:

If the yield curve is upward sloping, which of the following statements is incorrect? (hint: graph the yield curves for a T-bond, a AAA bond, and a B bond) Select one: a. The yield on the 5-year...

Q:

Assume these are the stock market and Treasury bill returns for a 5-year period: Year 2013 2014 2015 2016 2017 Stock Market T-Bill Return Return (%) (%) 33.20 0.11 12.70 0.11 -3.20 0.11 14.40 0.06...

Q:

7a Determine the IRR on the following projects: a. Initial outlay of $35,000 with an after-tax cash flow at the end of the year of $5,836 for seven years b. Initial outlay of $350,000 with an...