Moore Industries began operations on January 2, 2016, with an investment of $50,000 by each of its two stockholders.Net income for its first year of business was $240,000.Moore Industries paid a total of $100,000 in dividends to its stockholders during the year.

-Read the information about Moore Industries.The company's dividends for the year
A) Reduce the amount of capital stock reported by the company.
B) Are part of Moore Industries' operating costs.
C) Are reported on the statement of retained earnings.
D) Are an expense of Moore Industries.

Question

Moore Industries began operations on January 2, 2016, with an investment of $50,000 by each of its two stockholders.Net income for its first year of business was $240,000.Moore Industries paid a total of $100,000 in dividends to its stockholders during the year.
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-Read the information about Moore Industries.The company's dividends for the year
A) Reduce the amount of capital stock reported by the company.
B) Are part of Moore Industries' operating costs.
C) Are reported on the statement of retained earnings.
D) Are an expense of Moore Industries.

Quizplus · Accepted Answer

Dividends paid to stockholders are reported on the statement of retained earnings as a reduction in retained earnings. They are not an expense or operating cost of the company, and they do not affect the amount of capital stock reported on the balance sheet.

Moore Industries Began Operations on January 2, 2016, with an Investment