If Dividends Are Declared and Paid in the Same Accounting

question 8

Multiple Choice

If dividends are declared and paid in the same accounting period,what is the net effect on the accounting equation?

• A)a decrease in Retained Earnings and an increase in Expenses
• B)a decrease in Cash and an increase Expenses
• C)a decrease in Cash and an increase in Retained Earnings
• D)a decrease in Cash and a decrease in Retained Earnings

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Definitions:

Bilateral Contract

A contract involving two parties where each side agrees to fulfill their side of the agreement.

Bound

Bound refers to being legally or ethically obligated; in a legal context, it often means being tied by a contract or an agreement.

Consideration

A fundamental concept in contract law that refers to something of value exchanged between parties, which is required for a contract to be legally enforceable.

Negligently

Acting with a lack of reasonable care or concern for the consequences, leading to potential harm or damage.