Chapter 11, Problem 8QS

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.

The statements that are true regarding dividends.