Asked by Taylor Salone on May 09, 2024
Verified
The effects of the journal entry to record the declaration of the dividend on July 15, 2022, are to
A) decrease shareholders' equity and increase liabilities.
B) decrease shareholders' equity and decrease assets.
C) increase shareholders' equity and increase liabilities.
D) increase shareholders' equity and decrease assets.
Shareholders' Equity
Represents the residual interest in the assets of a corporation after deducting liabilities, essentially the net worth attributable to shareholders.
Liabilities
Financial obligations or debts that a company owes to external parties or creditors.
- Learn about the impact that stock and cash dividends have on the financial standing of shareholders and the sum of assets.
- Identify the suitable journal entries for the proclamation and disbursement of dividends.
Verified Answer
NP
Nicolas PedrazaMay 12, 2024
Final Answer :
A
Explanation :
The declaration of a dividend decreases shareholders' equity (as retained earnings are reduced) and increases liabilities (dividends payable) until the dividend is paid.
Learning Objectives
- Learn about the impact that stock and cash dividends have on the financial standing of shareholders and the sum of assets.
- Identify the suitable journal entries for the proclamation and disbursement of dividends.