The date on which a cash dividend becomes a binding legal obligation is on the
A) declaration date.
B) date of record.
C) payment date.
D) last day of the fiscal year.

Question

Quizplus · Accepted Answer

The declaration date is the date when a company's board of directors announces the intention to pay a dividend to its shareholders. At this point, the dividend becomes a binding legal obligation, and the company is committed to paying the stated amount to all eligible shareholders. The other dates (date of record and payment date) are important in the dividend process but do not represent the point at which the obligation becomes binding.

The Date on Which a Cash Dividend Becomes a Binding