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References Mailings Review View Help Uben Company paid $15.000 cash dividends to its Shareholders, contributed capital would
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Answer False.

Because cash dividend reduces retained earnings of the company. Which means it will reduces stockholders equity. When the directors declare the cash dividend accumulated profit (retained earnings) will decrease, at the same time current liability will increase( dividend payable). When dividend is paid it will increases the current liability( dividend payable ) and decreases the current asstes (cash). To pay cash dividend the company has to meet to two criteria firstly there must be enough cash in hand and secondly the conoaco must have sufficient retaimer earnings.

Retained Earnings means profit generated by a company that are not distributed to the stockholders as dividend, but are either reinvested in the business or kept as reserve for other objective.

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