Chapter 1, Problem 1.8BE

To determine

Dividends:

A business distributes its profit to stockholders if the net income of the business shows an increase in net assets. The distribution of profit from cash or any other assets to stockholders is called a dividend. Though it reduces retained earnings, it is not an expense. Net income is computed after determining the revenues and expenses and if the net asset results in net income, the business may decide to distribute the profit in the form of dividend to its owner.

Revenues:

Revenues are the amount, which generally results from the sale of goods or from the performance of services in the normal course of business. It results in an increase in stockholders' equity and assets, and decrease in liabilities. It may incur from different sources, such as, sales, commissions, dividends, royalties, interests, etc.

Expenses:

Expenses are a kind of cost associated with the assets that may incur while performing a service or delivering a product, in order to generate revenues. It decreases the value of assets, as it is paid directly from it, thereby decreasing the stockholders' equity. There are different types of expenses like supply expense, rent expense, interest expense, and operating expense.

Whether the given items belong to dividends (D), revenue (R), or expense (E).