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What is the effect to a business when its shareholders receive a large dividend? A. equity...

What is the effect to a business when its shareholders receive a large dividend?

A.

equity will increase and asset will decrease
B.

equity will decrease and an asset will increase
C.

an expense will increase and an asset will decrease
D.

an asset will decrease and equity will decrease
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Answer #1

D.an asset will decrease and equity willdecrease

When an organization delivers dividends to its shareholders, its shareholders' value is diminished by the complete estimation of all dividends paid. In any case, the impact of dividends changes relying upon the type of dividends an organization pays. Cash dividends decrease shareholders equity, while stock dividends don't lessen shareholders equity.

When the dividends are paid, the impact on the balance sheet is a decline in the organization's retained earnings and its cash balance. As it were, retained earnings and money are diminished by the complete estimation of the dividend.

A high-esteem dividend affirmation can show that the organization is doing well and has produced great profits. Yet, it can likewise demonstrate that the organization doesn't have reasonable projects to produce better returns in the future. Thusly, it is using its cash to pay shareholders as opposed to reinvesting it into growth.

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