If a company pays dividends of $10,000,

A) net income will be reduced by $10,000.
B) Retained earnings will be reduced by $10,000.
C) Stockholders' equity will be reduced by $10,000.
D) Both retained earnings and stockholders' equity will be reduced by $10,000 .

Dividend paid is usually deducted from the retained earnings. The retained earnings is the accumulated balance in the company's net income/loss over time shown in the balance sheet as a part of the owners equity.

The other part being the common stock.

Hence when dividend is paid, the retained earnings reduces and so does the shareholder's equity.

If a company pays dividends of $10,000, A) net income will be reduced by $10,000. B) Retained earnings will be reduced by $10,000. C) Stockholders' equity will be reduced by $10,000. D) Both retained earnings and stockholders' equity will be reduced by $10,000 .

Respuesta :

Otras preguntas

If a company pays dividends of $10,000,

A) net income will be reduced by $10,000.
B) Retained earnings will be reduced by $10,000.
C) Stockholders' equity will be reduced by $10,000.
D) Both retained earnings and stockholders' equity will be reduced by $10,000 .