A company's assets and stockholders' equity both decrease when a cash dividend is declared by the company's board of directors.

Question

Quizplus · Accepted Answer

When a cash dividend is declared by a company's board of directors, it results in a decrease in the company's retained earnings (part of stockholders' equity) and an increase in its current liabilities (dividends payable), but the total assets do not decrease until the dividend is actually paid out.

A Company's Assets and Stockholders' Equity Both Decrease When a Cash