Which of the following happens at the date of declaration?

Question

Quizplus · Accepted Answer

At the date of declaration, the company records the amount of dividends to be paid to shareholders as a liability on its balance sheet. This liability is recorded through the following entry: Dr. Dividends Declared, Cr. Dividends Payable. The entry in choice A is incorrect because Dividends Expense is recognized on the date of record, not the date of declaration. The entry in choice B is incorrect because cash is not yet paid out to shareholders at the date of declaration. The statement in choice D is incorrect because an entry is indeed made in the accounts at the date of declaration.

Which of the Following Happens at the Date of Declaration