Paying dividends causes a decrease in total assets, but an increase in total shareholders' equity.

Name: Paying dividends causes a decrease in total assets, but an increase in total shareholders' equity.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Paying dividends does not cause a decrease in total assets, as assets remain the same. Dividends are paid out of the company's retained earnings, which decrease by the amount of the dividend paid. This causes a decrease in total shareholders' equity, not an increase.

Paying Dividends Causes a Decrease in Total Assets, but an Increase