Question

A company declared $500,000 of dividends that will be paid two months from now.

Which of the following items would be increased by this dividend declaration transaction? (check all that apply)


Dividends Payable



Cash from Operations



Dividend Expenses



Net Income



Current Assets


1 point
8.
Question 8
A compan

Answer 1

In the scenario where a company declares $500,000 of dividends that will be paid two months from now, the following items would be affected:

1. **Dividends Payable**: This account will increase because the company now has a liability to pay dividends to shareholders.

The other items will not be affected by the declaration of dividends:

- **Cash from Operations**: This is not affected at the time of the declaration. The cash will be impacted when the dividends are actually paid out.

- **Dividend Expenses**: There is no specific "dividend expense" account in accounting; dividends declared affect retained earnings, not an expense account.

- **Net Income**: Dividends do not affect net income. They are distributions of profits rather than expenses.

- **Current Assets**: This will not be affected until the actual payment is made, at which point cash will decrease.

So, the correct answer is:

- Dividends Payable (will be increased).