If the dividends declared are not recorded as a reduction to Retained Earnings on the date of declaration, the Dividends account is closed to Retained Earnings at the end of the accounting period.

Question

Quizplus · Accepted Answer

Dividends declared are initially recorded in a temporary Dividends account, which is closed to Retained Earnings at the end of the accounting period to reflect the reduction in equity.

If the Dividends Declared Are Not Recorded as a Reduction