Question

The net effects on the corporation of the declaration and payment of a cash dividend are to increase assets and increase stockholders' equity. increase stockholders' equity and decrease liabilities. decrease assets and decrease stockholders' equity. decrease liabilities and decrease stockholders' equity.

Answer 1

Decrease assets and decrease stockholders equity

Step-by-step explanation:

Shareholders of the Company are rewarded for their contribution through dividends.

Declaration and payment of a cash dividend results in the following journal :

Dividend (debit)

Cash (credit)

Thus,

The Owners Equity Decrease whilst the Assets Account (Cash) Decreases