When is a liability for cash dividends created?

Question

Quizplus · Accepted Answer

A liability for cash dividends is created at the date of declaration when the board of directors formally authorizes the payment of dividends to shareholders. At this point, the company has a legal obligation to pay the declared dividends, and the liability is recognized on the balance sheet. The date of record determines which shareholders are eligible to receive the dividend, and the date of payment is when the actual cash is distributed to shareholders.

When Is a Liability for Cash Dividends Created