Dividends paid by a company are shown on the:
A) Income statement
B) Statement of changes in stockholders' equity
C) Statement of cash flows
D) Statement of changes in stockholders' equity and statement of cash flows

Question

Quizplus · Accepted Answer

Dividends paid to stockholders are shown in both the statement of changes in stockholders' equity and the statement of cash flows. In the statement of changes in stockholders' equity, dividends paid are deducted from the retained earnings account, which ultimately reduces the total equity. In the statement of cash flows, dividends paid are shown as a cash outflow from financing activities. They are not shown in the income statement because dividends are not an expense, but a distribution of profits to the stockholders.

Dividends Paid by a Company Are Shown on The