A liability for dividends exists:
A) When cumulative preference shares are sold.
B) On the date of declaration.
C) On the date of record.
D) On the date of payment.
E) For dividends in arrears on cumulative preference shares.

Question

Quizplus · Accepted Answer

A liability for dividends exists on the date of declaration because this is when the company formally commits to paying the dividend, creating an obligation.

A Liability for Dividends Exists