When cash payments are made to stockholders, what is the effect on the company's accounts?

A. Cash decrease and dividends increase

B. Cash increases and dividends decrease

C. Cash decreases and common stock decreases

D. Cash increases and common stock increases

D. Cash increases and common stock decreases

Explanation:

Cash is an asset account. Revenue increases stockholders' equity. This increases the left side and right side of the accounting equation by the same amount, which keeps it in balance.

For example, if you collect cash for a $1,000 sale, assets and stockholders' equity each increase by $1,000.