Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 49 - No. 4)
What is the impact on the accounting equation of declaring a dividend?
Assets increase, liabilities increase.
Assets decrease, liabilities increase.
Assets decrease, equity decreases.
Assets increase, equity increases.
Explanation
Declaring a dividend reduces the retained earnings part of the equity. A liability to pay is not created until the date the dividend is actually paid.
Comments (0)
