Arco Corporation declared a cash dividend on June 2 of $6 per common share.The company has 2,000 shares of common stock authorized,1,000 shares issued,and 200 in the treasury.The entry to record the declaration of the cash dividend increases a(n)
A)liability.
B)asset.
C)expense.
D)stockholders' equity account.

Question

Quizplus · Accepted Answer

When a corporation declares a cash dividend, it is committing to pay a specified amount to its shareholders. This creates a liability for the company because it now owes money to its shareholders. The liability account typically used is "Dividends Payable."

Arco Corporation Declared a Cash Dividend on June 2 of $6