The payment of a previously declared cash dividend has an overall effect of:
A) Reducing retained earnings and reducing liabilities by the amount of the dividend.
B) Reducing retained earnings and increasing contributed capital by the same amount.
C)Reducing assets and reducing liabilities by the amount of the dividend.
D)Reducing both assets and retained earnings by the amount of the dividenD.The payment of a previously declared dividend decreases the asset, cash, and decreases the liability, dividends payable.

Question

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The payment of a previously declared cash dividend reduces assets (cash) and reduces liabilities (dividends payable) by the amount of the dividend.

The Payment of a Previously Declared Cash Dividend Has an Overall