Liquidating dividends must be charged against the capital stock accounts because the corporation's retained earnings are appropriated for future business expansion.

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Liquidating dividends are distributions to shareholders that return a portion of their original investment rather than distributing the company's earnings or profits. These dividends are paid out when a company decides to reduce its business operations or completely liquidate its assets. They are not paid out of the retained earnings but rather from the paid-in capital of the company, which represents the shareholders' original investment in the company's stock.The statement "Liquidating dividends must be charged against the capital stock accounts because the corporation's retained earnings are appropriated for future business expansion" reflects the accounting treatment for liquidating dividends. When a company pays liquidating dividends, it is essentially returning part of the shareholders' initial investment back to them. Therefore, these dividends reduce the amount of the company's paid-in capital, which is recorded in the capital stock accounts on the balance sheet.
Retained earnings, on the other hand, represent the cumulative amount of net income that a company has earned over time and has not distributed to shareholders as dividends. Retained earnings are often used for reinvestment in the company, such as funding future business expansion, paying down debt, or acquiring new assets. Since liquidating dividends are not paid from retained earnings, they do not affect this account.
In summary, liquidating dividends are charged against the capital stock accounts because they represent a return of a portion of the shareholders' original investment in the company, rather than a distribution of profits earned by the company. This accounting treatment ensures that the financial statements accurately reflect the reduction in the company's equity resulting from the payment of liquidating dividends.

Liquidating Dividends Must Be Charged Against the Capital Stock Accounts