Cash dividends decrease both the assets and the retained earnings of a corporation.

Name: Cash dividends decrease both the assets and the retained earnings of a corporation.
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Question

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Cash dividends are payments made to shareholders from the profits of a corporation. Because they involve paying out money, assets decrease. Additionally, because dividends come out of the company's profits, they impact retained earnings, which also decrease. Thus, both assets and retained earnings are reduced by cash dividends.

Cash Dividends Decrease Both the Assets and the Retained Earnings