Dividends paid to a firm's owners are not considered an expense in the income statement.

Question

Quizplus · Accepted Answer

Dividends are not considered an expense in the income statement because they represent a distribution of profits to the firm's owners, rather than a cost incurred in generating those profits. Thus, they do not reduce the firm's net income or profit for the period, but rather represent a reduction in the retained earnings of the firm.

Dividends Paid to a Firm's Owners Are Not Considered an Expense