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

Question

Quizplus · Accepted Answer

When cash payments are made to stockholders as dividends, the company's cash balance decreases as cash is being paid out. At the same time, the company's retained earnings decrease and the dividend account increases, which ultimately leads to an increase in the total amount of dividends paid out. Therefore, choice A is the correct option.

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