Accounting for IGCSE & O level - Final Statements (Section 10 - No. 3)
What is the impact on the accounting equation of a company declaring and paying cash dividends?
Assets increase, Equity increases.
Assets decrease, Equity increases.
Assets increase, Equity decreases.
Assets decrease, Equity decreases.
Explication
Paying cash dividends decreases cash (assets) and retained earnings (equity).