If the board of directors authorizes a $100,000 restriction of retained earnings for a future plant expansion, the effect of this action is to

Question

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By setting aside $100,000 of retained earnings for a future plant expansion, the amount of retained earnings available for dividend declarations is reduced. This action does not affect assets, total equity, or total liabilities directly.

If the Board of Directors Authorizes a $100,000 Restriction of Retained