Cash payments of dividends

Cash payments of dividends - Retained Earnings 45,723...

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Cash payments of dividends.  This is the amount of dividends  paid  during the year. As the  statement of cash flows includes only cash activity, the declaration of a dividend does not result in  any reporting on the statement, it is only when the dividends are paid that they are included in the  statement cash flows. In analyzing the retained earnings account, the other activity is the net income.  The cash activities related to generating net income are included in the operating activities section of  the statement of cash flows, and therefore, are not included in the financing activities section. 
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Unformatted text preview: Retained Earnings 45,723 Beginning balance Dividends 600 6,300 Net income 51,423 Ending balance Reconciliation of net income to cash provided by (used by) operating activities If the direct method of preparing the statement of cash flows is used, the Financial Accounting Standards Board requires companies to disclose the reconciliation of net income to the net cash provided by (used by) operating activities that would have been reported if the indirect method had been used to prepare the statement....
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