Identify the account used by businesses to record the transfer of assets from a business to its stockholders:
A)A revenue account.
B)The dividends account.
C)The common stock account.
D)An expense account.
E)A liability account.

Question

Quizplus · Accepted Answer

The dividends account is used to record the transfer of assets from a business to its stockholders. Dividends are a distribution of the profits or retained earnings of the business to its stockholders. The common stock account records the initial investment made by stockholders, while revenue and expense accounts are used to record the business's operating activities. Liability accounts record the obligations of the business, such as loans or accounts payable, and are not relevant to the transfer of assets to stockholders.

Identify the Account Used by Businesses to Record the Transfer