On May 31,Team Shirts pays a $600 dividend to its shareholders.The dividend ________.

Question

Quizplus · Accepted Answer

When a company pays a dividend, it reduces its retained earnings, which is part of its equity. Therefore, option B is the correct choice. Option A is incorrect because a dividend payment does not increase assets. Option C is incorrect because a dividend is not an expense, but a distribution of profits to shareholders. Option D is incorrect because a dividend payment does not increase net income, but reduces it by reducing the retained earnings.

On May 31,Team Shirts Pays a $600 Dividend to Its