The closing entry for dividends involves a debit to A. Retained Earnings and a credit to Dividends.
What is a closing entry?
A closing entry is the journal entry at the end of the accounting period so that temporary ledger accounts (mainly income statement items) are moved to permanent accounts (balance sheet items).
Answer Options:
A. Retained Earnings; Dividends
B. Dividends; Retained Earnings
C. Dividends; Dividends Payable
D. Dividends Payable; Dividends
Thus, the closing entry for dividends is a debit to Retained Earnings, which is a permanent account, and a credit to Dividends (a temporary account).
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