Question

Dividends cause a(n) __________ in equity and are recorded directly in the _______ account.

Answer 1

Dividends cause a decrease in the equity account and are recorded directly in the dividend account.

Step-by-step explanation:

When dividends are paid out, owners equity decreases as dividends are paid out of retained earnings and after the dividends have been paid the share holders are left with less equity. Also they are directly recorded in the dividend account.