The amount for dividends is included on the following:
a. Balance sheet and income statement
b. Income statement and statement of retaining earnings
c. Balance sheet and statement of retained earnings
d. Statement of retained earning only.
To determine the correct answer, let's break down the options:
a. Balance sheet and income statement: The balance sheet represents a snapshot of a company's financial position at a specific point in time, including its assets, liabilities, and equity. Dividends are not typically included on the balance sheet because they are distributions of earnings to shareholders instead of a financial obligation. However, the income statement, also known as the statement of profit and loss, reports a company's revenues, expenses, and net income or loss over a specific period. Dividends paid out to shareholders are usually presented as an expense on the income statement, reducing net income.
b. Income statement and statement of retained earnings: As mentioned earlier, dividends paid to shareholders are typically reported as an expense on the income statement. The statement of retained earnings, on the other hand, shows the changes in a company's retained earnings balance over a specific period. Retained earnings represent the accumulated profits of the company that have not been distributed to shareholders as dividends. Therefore, the dividend amount is usually not reported on the statement of retained earnings.
c. Balance sheet and statement of retained earnings: While dividends are not reported on the balance sheet, the statement of retained earnings could be a possible place to find the dividend information. This is because the statement of retained earnings shows how a company's net income (or loss) from the income statement is adjusted for dividends and other factors to arrive at the ending balance of retained earnings. Dividends paid out to shareholders will reduce the retained earnings balance. So, this option could be a plausible answer.
d. Statement of retained earnings only: This option suggests that the dividend amount is shown solely on the statement of retained earnings. However, as mentioned earlier, dividends are typically reported as an expense on the income statement. Therefore, this option is likely incorrect.
Considering the explanations above, the most accurate answer is option c. The amount for dividends is included on the balance sheet and statement of retained earnings.