Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 23 - No. 5)
What effect does declaring and paying a cash dividend have on the balance sheet?
Increases assets and decreases equity.
Decreases assets and increases equity.
Decreases assets and decreases equity.
Increases assets and increases equity.
Explanation
Cash dividends reduce cash (an asset) and retained earnings (a component of equity).
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