If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to
A)decrease total assets and total stockholders' equity.
B)increase stockholders' equity and to decrease total liabilities.
C)decrease total retained earnings and increase total liabilities.
D)reduce the amount of retained earnings available for dividend declarations.

Question

Quizplus · Accepted Answer

The restriction of retained earnings for a future plant expansion reduces the amount of retained earnings available for dividends, but it does not affect total assets, liabilities, or stockholders' equity.

If the Board of Directors Authorizes a $100,000 Restriction of Retained