A liability for dividends is created at the
A)end of each fiscal year.
B)date of payment.
C)date of record.
D)date of declaration.

Question

Quizplus · Accepted Answer

The liability for dividends is created at the date of declaration, which is the date when the board of directors announces the intent to pay dividends. At this point, the company incurs a legal obligation to pay the dividend, and a liability is created on the balance sheet. The other options (end of fiscal year, date of payment, date of record) may be relevant in other aspects of dividend accounting, but they do not capture the moment when the liability is created.

A Liability for Dividends Is Created at the