If the board of directors authorizes a $1000000 restriction of retained earnings for a future plant expansion the effect of this action is to

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By authorizing a $1000000 restriction of retained earnings for a future plant expansion, the board of directors is essentially earmarking that amount for a specific purpose and reducing the amount of retained earnings available for dividend declarations. This does not affect total assets and total stockholders' equity, and it does not increase stockholders' equity or decrease total liabilities.

If the Board of Directors Authorizes a $1000000 Restriction of Retained