The Declaration of a Common Cash Dividend

question 65

Multiple Choice

The declaration of a common cash dividend

• A) Decreases a company's retained earnings balance
• B) Decreases the par value of outstanding stock
• C) Decreases the number of shares of outstanding stock
• D) Decreases the amount of cash

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Definitions:

Normal Balance

The side (debit or credit) of an account that is usually increased, reflecting its nature as an asset, liability, equity, revenue, or expense.

Equity

The ownership interest held by shareholders in a corporation, calculated as total assets minus total liabilities.

Liability

A financial obligation or debt that a company owes to others, which must be settled over time through the transfer of assets or services.

Asset

An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.