CH 5 - CH 5 Dividends(portion of retained earnings Dividends is not an expense o Its just a distribution of the profits Increased by a debit Decrease by

CH 5 - CH 5 Dividends(portion of retained earnings...

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CH 5 Dividends (portion of retained earnings)Dividends is not an expense oIt’s just a distribution of the profitsIncreased by a debit Decrease by a credit 1.Declaration date (when a company declaresthey will give out dividends)a.$1.50 a shareb.1000000 shares2.Record Date (how you decide who gets thedividends)(the date the company will look atto give out shares) a.No journal entry 3.Pay Dividends Fraud Financial statement fraudMisrepresentation of financial statementMisappropriation of assets ThefUsing company money for personal useCorruptionInternal controls 1.Establish responsibility a.One person of group 2.Segregate duties a.Basically a double check by someone else 3.Restrict Access 4.Document procedures 5.Independently verifya.Third party auditing b.Preform a bank reconciliation Books (your records)Bank statement (third party DATEACCTDRCR1Dividends declared1500000Dividends payable15000002Dividends payable1500000Cash1500000
records)Decrease balance NSF check Could do either EFT (electronics fund transfer)Decrease balance

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