In a study session, a classmate makes this statement "Dividends are listed as expenses on the income statement." What is your best response to this statement? A)I've been struggling with that concept and I feel that dividends should be shown on the balance sheet as assets. B)You are right.Revenues and expenses are shown on the income statement.Dividends are a cost of generating revenues and that makes them an expense.Why else would a corporation pay dividends? C)Dividends represent a portion of corporate profits paid to the shareholders.They belong on the retained earnings statement. D)Dividends are deducted from retained earnings on the balance sheet.

Question

Quizplus · Accepted Answer

Dividends are not expenses; they are distributions of profits to shareholders and are shown on the retained earnings statement, not the income statement.

In a Study Session, a Classmate Makes This Statement "Dividends