Which of the following statements regarding the date of a cash dividend declaration is not true?
A)The dividend can be cancelled once it has been declared.
B)The corporation is committed to a legal, binding obligation.
C)The board of directors formally authorizes the cash dividend.
D)A liability account must be created or increased.

Question

Quizplus · Accepted Answer

Once a dividend has been declared by the board of directors, the corporation is legally obligated to pay it, and it cannot be cancelled. This creates a binding commitment, necessitating the creation or increase of a liability account to reflect the obligation.

Which of the Following Statements Regarding the Date of a Cash