According to the "marginal principle of retained earnings," dividends are
A) the active variable.
B) the passive variable.
C) not usually paid.
D) a certain fixed percentage of earnings.

Question

Quizplus · Accepted Answer

According to the marginal principle of retained earnings, dividends are the passive variable, meaning they are adjusted based on the amount of earnings that are retained. The company may choose to pay all, some, or none of their retained earnings as dividends, depending on their financial needs and goals. Therefore, dividend payments are not usually a fixed percentage of earnings.

According to the "Marginal Principle of Retained Earnings," Dividends Are