A corporation records a dividend-related liability
A)on the payment date.
B)on the record date.
C)on the declaration date.
D)when the stock sells ex-dividend.

Question

Quizplus · Accepted Answer

A corporation records a dividend-related liability on the declaration date when the board of directors authorizes the payment and announces it to shareholders. This is when the corporation legally commits to paying the dividend and creates an obligation to shareholders. The payment date is when the dividend is actually paid out, and the record date determines which shareholders are eligible to receive the dividend. The ex-dividend date is the date on or after which a stock trades without a dividend, and it does not directly involve the corporation's recording of a liability.

A Corporation Records a Dividend-Related Liability