Which of the following occurs when a previously declared dividend is paid?
A)Liabilities increase
B)Liabilities decrease
C)Assets increase
D)Equity increases

Question

Quizplus · Accepted Answer

When a previously declared dividend is paid, it reduces the amount of retained earnings and thus, decreases the amount of liabilities (dividends payable) on the balance sheet. Therefore, option B is the correct answer. Options A, C, and D are incorrect, as paying dividends does not increase assets or equity and does not increase liabilities.

Which of the Following Occurs When a Previously Declared Dividend