Dividends:
A) always affect net income
B) are distributions to shareholders of assets (usually cash) generated by net income
C) are expenses
D) must be paid to shareholders when the company earns a profit

Question

Quizplus · Accepted Answer

Dividends are distributions to shareholders of a portion of the company's earnings, typically in the form of cash, and are not considered expenses. They do not necessarily have a direct impact on net income, although they do reduce retained earnings. Dividends are not required to be paid to shareholders, even when the company earns a profit.