How Does the Payment of a Previously Declared Cash Dividend

question 107

Multiple Choice

How does the payment of a previously declared cash dividend affect the financial statements?

• A)Decreases assets and stockholders' equity
• B)Increases liabilities and decreases stockholders' equity
• C)Decreases liabilities and increases stockholders' equity
• D)None of these answer choices are correct.

---

Definitions:

Net Increase

The difference between the current period's figure and the previous period's figure when the current period's figure is larger.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Operating Activities

Business activities directly related to the production and delivery of goods and services, reflecting the company's core operations.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business.