When a dividend has been declared but not yet paid
A)assets will increase and shareholders' equity will decrease.
B)assets will decrease and shareholders' equity will increase.
C)the balance sheet will not change until the dividend is paid.
D)liabilities will increase and shareholders' equity will decrease.

Question

Quizplus · Accepted Answer

When a dividend has been declared but not yet paid, a liability called "dividends payable" is recorded on the balance sheet, which increases liabilities and decreases shareholders' equity. Therefore, the correct answer is D.

When a Dividend Has Been Declared but Not Yet Paid