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The 12/31/2016 balance sheet of Despot Inc.included the following:

-In February 2016,Despot declared cash dividends of $12 million to be paid in April of that year.What effect did the April transaction have on Despot's accounts?
A)Decreased assets and liabilities.
B)Decreased assets and shareholders' equity.
C)Increased liabilities and decreased shareholders' equity.
D)None of these answer choices is correct.

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The 12/31/2016 balance sheet of Despot Inc.included the following:
 
-In February 2016,Despot declared cash dividends of $12 million to be paid in April of that year.What effect did the April transaction have on Despot's accounts?
A)Decreased assets and liabilities. 
B)Decreased assets and shareholders' equity. 
C)Increased liabilities and decreased shareholders' equity. 
D)None of these answer choices is correct.

Quizplus · Accepted Answer

The payment of cash dividends in April would decrease assets (cash) and decrease liabilities (dividends payable).

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