Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 23 - No. 22)
When a company declares and pays a cash dividend, what is the impact on the accounting equation?
Assets increase, liabilities increase.
Assets decrease, liabilities decrease.
Assets decrease, equity decreases.
Assets increase, equity increases.
Explanation
Cash (an asset) decreases, and Retained Earnings (a component of equity) decreases.
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