Cash dividends sometimes are declared in one reporting period and are payable in the next reporting period.The dividend should be recorded on the:

Question

Quizplus · Accepted Answer

Cash dividends should be recorded on the declaration date because it is the date on which the company declares the intention of paying dividends to its shareholders. The record date is used to determine the shareholders who are entitled to receive the dividend, and the payment date is the date on which the dividend is actually paid out to the shareholders. Therefore, recording the dividend on the payment date would not reflect the proper accounting period, and recording on the record date is not appropriate since it does not reflect the intention of the company to pay the dividend. The company should record the dividend on the declaration date when it announces the intention to pay out the dividend.

Cash Dividends Sometimes Are Declared in One Reporting Period and Are