medium · Financial Accounting stockholders-equity
A firm declares a $5,000 dividend on December 1, to be paid on December 20.
What is the effect on the accounting equation on the date of declaration?
- Cash decreases by $5,000 and Retained Earnings decrease by that same $5,000 amount.
- Net income for the current period decreases by $5,000 on the income statement.
- Liabilities increase by $5,000 and Retained Earnings decrease by $5,000.
- Total assets and total stockholders' equity both remain unchanged.
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