While preparing for an upcoming exam, you are studying with some classmates when one of them states the following: I
While preparing for an upcoming exam, you are studying with some classmates when one of them states the following:
“I always get confused when I am preparing the financing activities section of the statement of cash flows. I’m pretty certain that the payment of loan interest is a financing activity. I sometimes mix this up with how dividend payments are treated. I think that the declaration of dividends reduces retained earnings, but does not affect the statement of cash flow.”
Evaluate your classmate’s response. Identify the elements that are correct and incorrect.Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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