1. The payment of dividends reduces cash. If the Cash account is reduced with a credit, why is…

1. The payment of dividends reduces cash. If the Cash account is reduced with a credit, why is the Dividends account debited when dividends are paid?

2. If Cash is increased with a debit, why does the bank credit your account when you make a deposit?

3. Your friend presents the following criticism of the accounting system: “Accounting involves so much duplication of effort. First, entries are recorded in a journal; then the same information is recorded in a ledger. No wonder accountants work such long hours!” Do you agree with this criticism? Explain.