Liquidating dividends effect on retained earnings

Retained earnings are reported in the shareholders' equity section of the corporation's balance sheet.

Corporations with net accumulated losses may refer to negative shareholders' equity as positive shareholders' deficit.

For no-par preferred stock, the dividend is a specific dollar amount per share per year, such as USD 4.40.

For par value preferred stock, the dividend is usually stated as a percentage of the par value, such as 8% of par value; occasionally, it is a specific dollar amount per share. Usually, stockholders receive dividends on preferred stock quarterly.

Noncumulative preferred stock is preferred stock in which a dividend expires whenever the dividend is not declared.

When noncumulative preferred stock is outstanding, a dividend omitted or not paid in any one year need not be paid in any future year.

In the case of a net loss, Expenses will exceed Revenues.

If a corporation has a net loss the first year, or accumulates large losses over a period of years, the Retained Earnings account may go to a debit balance. If the net income is large enough, the Board of Directors may declare a dividend, illustrated below. The Company's Board of Directors declares a ,000 cash dividend, payable to stockholders, determined at a publicized date (called the "record date").

In accounting, the retained earnings at the end of one accounting period is the opening retained earnings in the next period, to which is added the net income or net loss for that period and from which is deducted the bonus shares issued in the year and dividends paid in that period.

If a company is publicly held, the balance of retained earnings account that is negatively referred to as "accumulated deficit" may appear in the Accountant's Opinion in what is called the "Ongoing Concern" statement located at the end of required SEC financial reporting at the end of each quarter.

Companies issue preferred stock to avoid: Unlike common stock, which has no set maximum or minimum dividend, the dividend return on preferred stock is usually stated at an amount per share or as a percentage of par value. When a corporation issues both preferred and common stock, the preferred stock may be: Stock preferred as to dividends means that the preferred stockholders receive a specified dividend per share before common stockholders receive any dividends.

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