Which of the following is TRUE of dividends?

Question

Quizplus · Accepted Answer

Dividends are a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. They can be issued in various forms, such as cash payments, shares of stock, or other property. Dividends do not increase assets; instead, they typically decrease cash (an asset) and decrease total stockholders' equity because they represent a distribution of earnings to shareholders. They do not directly affect paid-in capital nor increase stockholders' equity; rather, they decrease it by reducing the company's retained earnings.

Which of the Following Is TRUE of Dividends