Question

Fetcher Corporation had the following stockholders' equity accounts.

A) Common stock, Retained earnings, Dividends
B) Preferred stock, Retained earnings, Liabilities
C) Common stock, Preferred stock, Assets
D) Dividends, Liabilities, Assets

Answer 1

The correct components of Fetcher Corporation's stockholders' equity accounts are Common stock, Retained earnings, and Dividends. These reflect ownership in the corporation and the profits available to shareholders. The board of directors usually decides when to issue stock, pay dividends, or reinvest profits, especially in public companies.

Step-by-step explanation:

In examining the options provided for Fetcher Corporation's stockholders' equity accounts, it is important to identify which groupings accurately reflect components of stockholders' equity. Only one of the provided sets of accounts is correct:

• Common stock, Retained earnings, Dividends

This correctly lists the elements as they would typically appear in the stockholders' equity section of a corporation's balance sheet. Common stock and preferred stock represent ownership stakes; retained earnings are the company's accumulated net income minus dividends paid out to shareholders. Dividends are direct payments from a firm to its shareholders. Liabilities and assets, while part of the balance sheet, do not fall under stockholders' equity.

Decisions about when to issue stock, pay dividends, or reinvest profits are typically made by the corporation's board of directors, particularly for public companies. Private companies may have a smaller group of investors or individuals with decision-making power.