Because the payment of cash dividends reduces both cash and retained earnings by a similar amount, this transaction has no effect on the statement of cash flows.

Name: Because the payment of cash dividends reduces both cash and retained earnings by a similar amount, this transaction has no effect on the statement of cash flows.
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Question

Quizplus · Accepted Answer

The payment of cash dividends is reported in the financing activities section of the statement of cash flows, reflecting a reduction in cash, thus affecting the statement.

Because the Payment of Cash Dividends Reduces Both Cash and Retained