BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Dividends Payable Journal Entry [Debit-Credit] The correct journal entry post-declaration would thus be a debit to the retained earnings account and a credit of an equal amount to the dividends payable account. The important distinction here is that the actual cash outflow does not occur until the actual payment date.

Detailed explanation-2: -Treatment of Dividends in Financial Reporting Under generally accepted accounting principles (GAAP), dividends are not considered an expense of doing business; instead, they are accounted for as a reduction of equity on the balance sheet and added back to net income to compute earnings per share.

Detailed explanation-3: -Dividends are not reported on the income statement. They would be found in a statement of retained earnings or statement of stockholders’ equity once declared and in a statement of cash flows when paid.

Detailed explanation-4: -EPS stands for earnings per share. This metric tells investors how much money a company makes for each of its shares. EPS is one of the most common ways to gauge a company’s profitability.