Payment of a dividend decreases both cash and stockholders' equity of the distributing business.

Name: Payment of a dividend decreases both cash and stockholders' equity of the distributing business.
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Question

​Payment of a dividend decreases both cash and stockholders' equity of the distributing business.

Quizplus · Accepted Answer

When a company pays a dividend, it reduces its cash balance as it disburses funds to shareholders. Additionally, paying a dividend reduces the retained earnings portion of the stockholders' equity section of the balance sheet, thereby decreasing overall stockholders' equity.

​Payment of a Dividend Decreases Both Cash and Stockholders' Equity

Payment of a Dividend Decreases Both Cash and Stockholders' Equity