Since dividends do not impact income, the dividends account is not closed to the income summary account.

Name: Since dividends do not impact income, the dividends account is not closed to the income summary account.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Dividends are distributions to shareholders and are not considered an expense; therefore, they do not affect the company's net income or loss. Instead, dividends are closed directly to retained earnings, bypassing the income summary account.

Since Dividends Do Not Impact Income, the Dividends Account Is