When a corporation declares a cash dividend,which of the following is true?

Question

Quizplus · Accepted Answer

When a corporation declares a cash dividend, they are distributing a portion of their earnings to their shareholders. This decreases the amount of retained earnings, which is a component of stockholders' equity. Therefore, Option C is the correct choice. Option A is incorrect because the cash is being distributed, not decreasing. Option B is also incorrect because liabilities are not affected by the declaration of a cash dividend. Option D is incorrect because an entry is necessary to record the payment of dividends.

When a Corporation Declares a Cash Dividend,which of the Following