Owners of Tri-States Industries, Ralph and Maureen, are sent a dividend check from the company.For this transaction, what is the effect on the accounting equation for Tri-States Industries?
A) Assets decrease and stockholders' equity decreases.
B) Assets increase and stockholders' equity increases..
C) Liabilities increase and stockholders' equity decreases.
D) Liabilities increase and stockholders' equity decreases

Question

Quizplus · Accepted Answer

When a company pays dividends, it uses its assets (cash) to pay the owners, which decreases its assets. At the same time, this payment reduces retained earnings, a component of stockholders' equity, thus decreasing stockholders' equity.

Owners of Tri-States Industries, Ralph and Maureen, Are Sent a Dividend