Stockholders' equity will be reduced by:
A) payment of dividends.
B) increase in revenues.
C) owners' investments.
D) issuance of bonds.

Question

Quizplus · Accepted Answer

Payment of dividends directly decreases the amount of retained earnings, which in turn decreases stockholders' equity. Therefore, option A is the correct answer. Option B is incorrect because an increase in revenues would increase retained earnings and ultimately increase stockholders' equity. Option C is incorrect because owners' investments would increase stockholders' equity. Option D is incorrect because the issuance of bonds would increase liabilities, not decrease stockholders' equity.

Stockholders' Equity Will Be Reduced By