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Closing entries close out your temporary or "income statement" accounts, as well as your dividends paid account. All of your revenue accounts increase your retained earnings, expense accounts decrease retained earnings, and dividends paid decrease retained earnings.
Dividend account is the account used to record money paid on stock such as common stock, this comes out of retained earnings. Expense accounts are expenses that the company has to maintain operation and come out of Revenue, before dividends are calculated. A company may choose to not pay dividends on stock for a year (or so) if the company's retained earnings do not meat a certain amount.
Revenues Increase and Expense Decreases.
Salaries expense is not a permanent account because it will ultimately be closed to retained earning account at the end of fiscal year and from new year salaries expense account start with nill balance.
No a dividend is not an expense. It is generally a reduction of retained earnings in the equity section of the balance sheet.
When you close the accounts, it totals into retained earnings, so in turn, it is essentially retained earnings.
Retained earnings can become negative, creating a deficit. The retained earnings general ledger account is adjusted every time a journal entry is made to an expense or income account.
Closing entries close out your temporary or "income statement" accounts, as well as your dividends paid account. All of your revenue accounts increase your retained earnings, expense accounts decrease retained earnings, and dividends paid decrease retained earnings.
Dividend account is the account used to record money paid on stock such as common stock, this comes out of retained earnings. Expense accounts are expenses that the company has to maintain operation and come out of Revenue, before dividends are calculated. A company may choose to not pay dividends on stock for a year (or so) if the company's retained earnings do not meat a certain amount.
Revenues Increase and Expense Decreases.
Salaries expense is not a permanent account because it will ultimately be closed to retained earning account at the end of fiscal year and from new year salaries expense account start with nill balance.
No a dividend is not an expense. It is generally a reduction of retained earnings in the equity section of the balance sheet.
more revenue or less expense or a combinatio of both
Hi, Dividends are paid out of retained earnings (part of Capital) therefore I think Dividends can not be treated as an expense (the prudence being increase in Capital can not be treated as Revenue thats Cash generation while dividends are Surplus appropriation). regards, Zeeshan
Land purchase
Wages expense
Owner's Equity = Contributed Capital ± Retained Earnings Contributed capital is money that has been contributed to a company by its owners or by a direct investment made by stockholders in a corporation. A company would have stockholders if that company sells shares or stock. Retained earnings is a companys' accumulated profits that have been put back or reinvested into the company. Some examples of retained earnings are supplies expense, rent expense, wages expense, interest expense, utilities expense, sales revenue, cost of goods sold, and depreciation expense. A return on equity (ROE) is the net income divided by stockholders' equity. Assets = Liabilities + Owners Equity