Question

The declaration of a cash dividend causes stockholders' equity to decrease but has no immediate effect upon corporate assets.

True/False

Answer 1

False

Step-by-step explanation:

Dividend is the amount of money paid out of a corporation's profit to the shareholders, which serves as return on investment.

Dividends are always paid out of current asset which is cash and such payment decreases the corporation's asset. Since it is paid out of earnings, it also decreases stockholders' equity.