Dividends paid to shareholders:
A) increase expenses.
B) decrease retained earnings.
C) increase assets.
D) decrease income.

Question

Quizplus · Accepted Answer

Dividends are payments made to shareholders from a company's earnings after taxes and other expenses have been paid. These payments reduce the amount of retained earnings, which is the portion of a company's profits that is kept in the business and not distributed as dividends. Therefore, dividends decrease retained earnings.

Dividends Paid to Shareholders