The net effects on the corporation of the declaration and payment of a cash dividend are to
A)decrease liabilities and decrease stockholders' equity.
B)increase stockholders' equity and decrease liabilities.
C)decrease assets and decrease stockholders' equity.
D)increase assets and increase stockholders' equity.

Question

Quizplus · Accepted Answer

The declaration of a cash dividend decreases stockholders' equity as it reduces retained earnings. The payment of the dividend decreases assets as cash is paid out.

The Net Effects on the Corporation of the Declaration and Payment