Paying a dividend to the company's stockholders would include a debit to:
A) Cash and a credit to Dividends.
B) Dividends and a credit to Cash.
C) Retained Earnings and a credit to Cash.
D) Accounts Payable and a credit to Retained Earnings.

Question

Quizplus · Accepted Answer

When a company pays a dividend to its stockholders, it reduces the amount of cash it has on hand, so there is a debit to the Dividends account and a credit to the Cash account. Therefore, the correct choice is B.

Paying a Dividend to the Company's Stockholders Would Include a Debit