A dividend will reduce which of the following accounts?
A) Dividends
B) Retained Earnings
C) Common Stock
D) Accounts Payable

Question

Quizplus · Accepted Answer

Dividends are paid out of retained earnings, therefore a dividend payment would decrease the amount of retained earnings available in the company's financial statements. Option A is incorrect because a dividend payment increases the amount of dividends paid out. Option C is incorrect because common stock is not affected by a dividend payment. Option D is incorrect because Accounts Payable are liabilities owed to vendors and are not impacted by a dividend payment.

A Dividend Will Reduce Which of the Following Accounts