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Total assets is decreased, liabilities in decreased and stockholders' equity is increased.
If everything else is equal, a company's equity will rise when its assets rise, and vice versa. Adding liabilities reduces equity, while reducing liabilities (for example, by paying off debt) increases equity. These fundamental concepts are critical to modern accounting methods. Paying a dividend reduces cash (i.e., assets) as well as retained earnings, which is an equity account. As a result, assets decrease and equity decreases.
Through retained earnings, revenues increase stockholder equity, while expenses decrease it. This demonstrates the direct relationship between an income statement and a balance sheet.
If you have revenues and profits, your owner's equity will rise. When there are expenses and losses, the owner's equity decreases.
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