Assuming the number of shares outstanding and total earnings remains constant,an increase in dividends per share will:
A)reduce the earnings per share.
B)reduce the addition to retained earnings.
C)reduce net income.
D)increase total equity.
E)increase total assets.

Question

Quizplus · Accepted Answer

An increase in dividends per share will reduce the addition to retained earnings because the amount of money available to be reinvested back into the company decreases as more is paid out to shareholders as dividends.

Assuming the Number of Shares Outstanding and Total Earnings Remains