The closing process includes a transfer of the Dividends Declared account balance to the Retained Earnings account.

Question

Quizplus · Accepted Answer

This statement is true. At the end of the accounting period, any dividends that have been declared but not yet paid are transferred from the Dividends Declared account to the Retained Earnings account as part of the closing process. This reflects the fact that these earnings are no longer available to be distributed to shareholders and are now retained within the company.

The Closing Process Includes a Transfer of the Dividends Declared