Gruening Company declared and paid a cash dividend.Which of the following choices accurately reflects how this event would affect the company's financial statements?

Question

Quizplus · Accepted Answer

When a company declares and pays a cash dividend, it reduces its retained earnings, which is reported on the balance sheet as a reduction in equity. Therefore, the stockholders' equity section of the balance sheet will decrease, as shown in choice D. The income statement and cash flow statement will not be affected by the payment of dividends.

Gruening Company Declared and Paid a Cash Dividend