Cash dividends represent a distribution of profits to shareholders and thus decrease the amount of retained earnings on the retained earnings statement. They do not impact expenses or revenue on the income statement, nor do they impact operating activities on the cash flow statement.

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Cash Dividends

Question 32

Multiple Choice

Cash dividends:

A) increase expenses on the income statement
B) decrease revenue on the income statement
C) decrease retained earnings on the retained earnings statement
D) decrease operating activities on the cash flow statement

Correct Answer: