Money-Weighted Return Question

Hi monkeys,

So I am having somewhat of a hard time understanding the concept of money-weighted return, specifically the amounts a different t’s. If I am approaching a question from the view of the portfolio (purchase 1 share is a +100):

At t=0 purchase 1 share for $100

At t=1 purchase another share for $120; Dividend from first share $2 (Total inflows/outflows at t=1 is $118)

Why would a dividend, which I assume is a check from a company not to the account, subtract from the overall account value?

Thanks for the help in advance!

It would be subtracted only if the investor withdraws it from the portfolio.