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Question

What will be the impact in accounting equation when dividend is received from a company?



A

Assets - Decrease
Liabilities - No effect
Capital - Decrease

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B

Assets - No effect
Liabilities - Decrease
Capital - Increase

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C

Assets - Increase
Liabilities - No effect
Capital - Increase

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D

None of these

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Solution

The correct option is C

Assets - Increase
Liabilities - No effect
Capital - Increase


When dividend is received, it will increase cash which is an asset and since it is a revenue it will increase the capital.


Accountancy

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