Cash payment of dividends leads to cash outflow and is recorded in the books and accounts as net reductions. As the company loses ownership of its liquid assets in the form of cash dividends, it reduces the company’s asset value on the balance sheet, thereby impacting RE. Retained earnings accumulate all profits and losses from when a company starts operating. […]

This is the general practice under the matching principle as the revenues are kept along with their expenses in the accounting period thus giving a more complete picture for accounting purposes. Unlike the other methods, the units of production depreciation method does not depreciate the asset based on time passed, but on the units the asset produced throughout the period. […]