The payment of a dividend will reduce the following two accounts
A)Common shares and cash
B)Cash and dividends payable
C)Equity and retained earnings
D)Retained earnings and dividends payable
E)Equity and cash

Question

Quizplus · Accepted Answer

When a company pays a dividend, it reduces the cash balance as it pays out cash to its shareholders. At the same time, it reduces the dividends payable account, as it is no longer obligated to pay that amount to its shareholders. Therefore, the correct choice is B, as it includes both cash and dividends payable being reduced.

The Payment of a Dividend Will Reduce the Following Two