Cash dividends are an example of which of the following elements?

• Distribution to owners

• Expenses

• Equity

• Investment by owners

Answer

--Answer = Option #1: Cash Dividends are an example of 'Distribution to owners'.

--Stockholders are considered the owners of corporations. Cash Dividend is the cash amount paid to these owners from the Net Income (or Retained Earnings) of the business.

--The past accumulated profits gets 'distributed' to the owners in the form of Cash Dividend.

--Cash Dividend though however DECREASES Equity, because Retained Earnings gets reduced by the amount of Cash dividend declared/paid.