A cash dividend becomes a legal liability of the corporation on the:

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A cash dividend becomes a legal liability of the corporation on the date of declaration. This is when the board of directors announces its intention to pay a dividend and sets the amount, record date, and payment date. The record date determines which shareholders are entitled to receive the dividend, while the payment date is when the dividend is actually distributed to these shareholders. However, the legal liability is established on the date of declaration, as this is when the corporation incurs an obligation to pay the dividend to its shareholders.

A Cash Dividend Becomes a Legal Liability of the Corporation