Which of the following happens at the date of declaration?
A)Dr.Dividends expense, Cr.Dividends declared
B)Dr.Dividends declared, Cr.Cash
C)Dr.Dividends declared, Cr.Dividends payable
D)The board of directors approves the dividend but no entry is made in the accounts.

Question

Quizplus · Accepted Answer

At the date of declaration, the board of directors approves the payment of dividends and a liability is created for the company to pay dividends to its shareholders. Therefore, the entry made would be Dr. Dividends declared and Cr. Dividends payable. Option A is incorrect because dividends expense is recognized when the dividends are paid, not declared. Option B is incorrect because it assumes that the company is paying the dividends at the same time they are declaring them. Option D is incorrect because an entry is made in the accounts at the date of declaration.

Which of the Following Happens at the Date of Declaration