The Digby Company has just issued $7,169,042 in dividends last year. The effect
ID: 2803041 • Letter: T
Question
The Digby Company has just issued $7,169,042 in dividends last year. The effect of this payment on the balance sheet is: Select: 1 Liabilities will increase $7,169,042 Net Profit will decrease $7,169,042 Equity will decrease $7,169,042 Expenses will increase $7,169,042
The Digby Company has just issued $7,169,042 in dividends last year. The effect of this payment on the balance sheet is: Select: 1 Liabilities will increase $7,169,042 Net Profit will decrease $7,169,042 Equity will decrease $7,169,042 Expenses will increase $7,169,042
Explanation / Answer
The effect of the payment will be that Net profit will decrease by $7169042 since the amount of distributed from the profits earned by the company during the year. The more the dividend, the lesser the profits left for the company