Dividends impact the balance sheet in the following ways ^{1 2 3 4 5}:

• Dividends are not specifically part of stockholder equity, but the payout of cash dividends reduces the amount of stockholder equity.
• Cash dividends affect the cash and shareholders' equity accounts.
• There is no separate balance sheet account for dividends after they are paid.
• When cash dividends are paid, this reduces the cash balance stated within the assets section of the balance sheet, as well as the offsetting amount of retained earnings in the equity section of the report.