The entry to record the payment of a cash dividend previously declared includes a:

Question

Quizplus · Accepted Answer

The payment of a cash dividend previously declared decreases the liability through a debit to the Dividends Payable account. Therefore, the correct choice is a debit to Dividends Payable. Other options are incorrect as Retained Earnings is not affected by the dividend payment, but by the declaration of the dividend, and Dividends Payable is not credited but debited to decrease the liability.

The Entry to Record the Payment of a Cash Dividend