When cash payments are made to stockholders,what is the effect on the company's accounts?

Question

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When cash payments are made to stockholders in the form of dividends, the company's cash account decreases (since cash is going out of the company) while the dividends account (which is part of retained earnings) increases. This is because dividends are a distribution of profits to the stockholders and reduce the amount of retained earnings. The common stock account is not affected by the payment of dividends.

When Cash Payments Are Made to Stockholders,what Is the Effect