Once properly declared, the effect of a cash dividend is that it:

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When a cash dividend is properly declared, it becomes a debt that the corporation owes to its shareholders. The shareholders have a right to receive the dividend, and the corporation has a legal obligation to pay it. This creates a liability on the corporation's balance sheet. However, until the dividend is actually paid, it is not considered a debt that can be revoked or cancelled. Additionally, directors who vote for the dividend and shareholders are not personally liable for the dividend.

Once Properly Declared, the Effect of a Cash Dividend Is