Whenever __________ are sold by a company,they pay out dividend payments to the purchaser,and the amount of the sale is shown as owners' equity on the balance sheet.

Question

Quizplus · Accepted Answer

Stocks represent ownership in a company, and when they are sold, the purchaser becomes a shareholder and is entitled to receive dividend payments. The amount paid out as dividends is shown as a reduction in retained earnings on the balance sheet, while the value of the shares owned by the shareholders is shown as owners' equity. Capital assets, short-term loans, and bonds do not necessarily involve ownership in a company or payment of dividends, so they are not the best choice for this question.

Whenever __________ Are Sold by a Company,they Pay Out Dividend