Question

Ramos Repair Company is paying a cash dividend. How does this transaction affect Ramos Repair Company's accounting équation?

a) decrease ivy assets (Cash) and decrease in Babilities (Accounts Payable)
b) increase in assets (Cash) and decrease in stockholders' equity (Dividends)
c) increase in assets (Cash) and decrease in stockholders' equity (Dividends)
d) Increase in assets (Accounts Receivable) and decrease in assets (Cash)

Answer 1

When Ramos Repair Company pays a cash dividend, it increases assets (Cash) and decreases stockholders' equity (Dividends).

Step-by-step explanation:

When Ramos Repair Company pays a cash dividend, it affects the accounting equation by increasing the assets (Cash) and decreasing the stockholders' equity (Dividends). This is represented by option c) Increase in assets (Cash) and decrease in stockholders' equity (Dividends).