The Major Accounting Difference Between Interest Expense for Creditors and Dividends

Multiple Choice

The major accounting difference between interest expense for creditors and dividends declared and paid to shareholders is that interest expense:

A) decreases retained earnings and dividends increase retained earnings.
B) impacts cash flows, while dividends do not.
C) is not on the income statement while dividends declared and paid are.
D) is on the income statement and dividends declared and paid are not.