When a corporation issues a dividend in excess of the balance of its retained earnings account, it is issuing a:
A)Property dividend.
B)Liquidating dividend.
C)Stock dividend.
D)Scrip dividend.

Question

Quizplus · Accepted Answer

A liquidating dividend is issued when a company pays a dividend to its shareholders that exceeds the balance of its retained earnings, essentially returning part of the capital originally invested back to the shareholders. This is different from regular dividends that are paid out of the company's current or accumulated earnings.

When a Corporation Issues a Dividend in Excess of the Balance