Indicate the respective effects of the declaration of a cash dividend on "Total Assets", "Total Liabilities", and "Total Stockholders' Equity": Select one: a. Decrease, Increase, and Decrease b. No change, Increase, and Decrease c. No change, Increase, and No change d. Decrease, No change, and Increase e. Decrease, Decrease, and No change

Question

Business

Owen Lin

6 February, 01:39

Indicate the respective effects of the declaration of a cash dividend on "Total Assets", "Total Liabilities", and "Total Stockholders' Equity": Select one: a. Decrease, Increase, and Decrease b. No change, Increase, and Decrease c. No change, Increase, and No change d. Decrease, No change, and Increase e. Decrease, Decrease, and No change

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Delaney Harmon · Answer 1

Answer: The correct answer is "b. No change, Increase, and Decrease".

Explanation: The declaration of a dividend in the "total assets" does not cause any change since the dividends are distributed from a "Total Stockholders" account called "profit for the period" or from previous earnings grouped into an account generally called "unassigned earnings".

In the "Total Liabilities" it generates an increase since the creation of a debt of the company with the creditor of the dividend is formalized.

And in "Total Stockholders" it generates a decrease since those results mentioned above come out of the capital of the company.