How Will a Company's Working Capital and Net Income Be

How will a company's working capital and net income be affected by the recording of a cash dividend on the declaration date? (Assume the dividend is paid on a later date.) $\begin{array}{lll}& \text {Working Capital}& \text {Net Income}\\ \text { I. } & \text { decrease } & \text { decrease } \\\text { II. } & \text { decrease } & \text { no effect }\\\text { III. } & \text { no effect } & \text { no effect }\\ \text { IV. }& \text { no effect } & \text { decrease }\end{array}$

A) I
B) II
C) III
D) IV

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