The dividends declared and paid by a “X” corporation to its shareholders affect its financial position as follows:

Question

(A) Decrease retained earnings and increase cash

(B) Decrease retained earnings and decrease cash

(C) Increase retained earnings and no effect on cash

(D) Increase retained earnings and increase cash

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN · Answer

Answer option (B) >>>>>>>>> Decrease retained earnings and decrease cash

Jobish Mathew · Answer

B

Deleted user · Answer

Dr. Retained earnings

Cr. Dividends payable - (accrual as shareholders need to approve the dividends proposed)

Recognition of the dividends proposed by directors y/end2014

Upon shareholder approval and authorisation of the financial statements at the AGM; the dividends are paid out: the entries are:

Dr. Dividends payable

Cr. Bank

Payment of dividends declared2014

CONCLUSION: (B) is the correct answer

Hany Sabry · Answer

The answer Is (B) Decrease retained earnings and decrease cash

Ghous Ahmad · Answer

Muhammad Javed · Answer

Correct answer is: B

Mohammed Mohammed · Answer

B is correct answer..............

Khurram Shaukat Memon · Answer

Option (b) may fit as correct answer.