Which of the following occurs when a cash dividend is declared?
A) liabilities remain unchanged
B) stockholders' equity decreases
C) liabilities decrease
D) assets increase

Question

Quizplus · Accepted Answer

When a cash dividend is declared, stockholders' equity decreases because the amount of cash being distributed to shareholders represents a reduction in the company's assets (cash) and thus a reduction in the owners' equity in the company. Liabilities and assets remain unchanged as they are not directly affected by the declaration of a cash dividend.

Which of the Following Occurs When a Cash Dividend Is