Questions: Dividends paid to shareholders is on which financial statement?

The answer is: Statement of Shareholders' Equity.

Explanation for each option:

1. Statement of Shareholders' Equity: This is the correct answer. Dividends paid to shareholders are recorded on the Statement of Shareholders' Equity. This financial statement shows changes in the equity section of the balance sheet over a specific period, including dividends paid, which reduce the retained earnings.

2. Income Statement: This is incorrect. The Income Statement, also known as the Profit and Loss Statement, reports a company's revenues and expenses over a specific period. While it shows the net income, it does not include dividends paid to shareholders.

3. Balance Sheet: This is incorrect. The Balance Sheet provides a snapshot of a company's financial position at a specific point in time, listing assets, liabilities, and shareholders' equity. While dividends affect the retained earnings component of shareholders' equity, the actual payment of dividends is not directly shown on the Balance Sheet.

In summary, dividends paid to shareholders are recorded on the Statement of Shareholders' Equity, as they represent a distribution of earnings to shareholders and reduce the retained earnings.