The Net Effects on a Corporation of the Declaration and Payment

question 31

Multiple Choice

The net effects on a corporation of the declaration and payment of a cash dividend are to

• A)increase assets and increase stockholders' equity.
• B)decrease liabilities and decrease stockholders' equity.
• C)decrease assets and decrease stockholders' equity.
• D)increase stockholders' equity and decrease liabilities.

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Definitions:

Under Consumption

A situation where consumers are spending less than what is needed to drive economic growth due to various factors like low income or high savings.

Sunspot Theory

A theory in economics that suggests that economic cycles might be driven by psychological factors or extrinsic shocks, rather than fundamentals alone.

Psychological

Pertaining to the mind or mental processes, often emphasizing the influence on behavior, perception, and emotion.

Endogenous

Refers to factors or processes that originate from within a system or model.