The classification and normal balance of the dividends account is
A) an expense with a credit balance
B) an expense with a debit balance
C) a liability with a credit balance
D) a stockholders' equity item with a debit balance

Question

Quizplus · Accepted Answer

Dividends account represents the distributions made to the shareholders from the company's earnings or profits. It is an equity item and has a debit balance because it decreases the retained earnings, which is also an equity account with a credit balance. Therefore, it is classified as a stockholders' equity item with a debit balance.

The Classification and Normal Balance of the Dividends Account Is