Final answer:
Paying a cash dividend results in a decrease in the company's assets because cash is paid out to shareholders. There is no change in the company's liabilities when a cash dividend is paid. Therefore, the correct option showing the financial statement effect is b) Assets: -, Liabilities: -.
Step-by-step explanation:
The question asks how paying a cash dividend will affect a company's financial statements. When a company issues a cash dividend, it is distributing part of its earnings to its shareholders. As a result, the company's assets will decrease because it is using its cash (an asset) to pay the dividend. At the same time, its liabilities remain unchanged because a dividend payout does not create a liability; it's a reduction in equity.
Option c) Assets: -, Liabilities: - is incorrect because liabilities do not decrease as a result of paying dividends. Option a) Assets: +, Liabilities: - and Option d) Assets: +, Liabilities: + are also incorrect because paying dividends won't increase assets or liabilities. Therefore, the correct option is b) Assets: -, Liabilities: + as only the assets are reduced by the cash dividend payment.