Any dividend that is considered to be a liquidating dividend will:
A) Reduce retained earnings.
B) Reduce paid-in capital.
C) Increase paid-in capital.
D) Reduce the common stock account.

Question

Quizplus · Accepted Answer

Liquidating dividends are distributions to shareholders that return some of the original investment back to them. They reduce paid-in capital because they are not paid out of the earnings or profits of the company. Instead, they represent a return of a portion of the capital originally contributed by shareholders.

Any Dividend That Is Considered to Be a Liquidating Dividend