Question

Which of the following statements is true

A) Amounts received from issuing stock are revenues

B) Amounts paid out as dividends are not expenses

C) Amounts paid out as dividends are reported on the income statement

D) Amounts received from issued stock are reported on the income statement.

Answer 1

The correct statement is that amounts paid out as dividends are not expenses. A share of stock represents ownership in a company, and dividends are payments made by a company to its shareholders. A capital gain refers to the increase in the value of an investment.

Step-by-step explanation:

The correct statement among the options is B) Amounts paid out as dividends are not expenses.

A share of stock represents ownership in a company. When firms issue stock, they receive money from the stock sale in their firm. These funds can be used for various purposes such as investments, new projects, or paying off debt. However, firms do not receive money when dividends are paid out to shareholders.

A dividend is a payment made by a company to its shareholders as a distribution of profits. Typically, dividends are paid in cash but they can also be paid in the form of additional shares of stock or other assets.

A capital gain refers to the increase in the value of an investment, such as a stock, between the time it is purchased and the time it is sold. It is the difference between the purchase price and the sale price.