Which statement about cash dividends is correct?
A)The date of declaration is the date that determines which shareholders will receive the dividends.
B)The date of declaration is the date on which the Board of Directors declares a dividend and the company has an obligation to pay the dividend.
C)The date of record is the date when the funds for the dividend are transferred to shareholders.
D)The company must record a journal entry on the date of declaration, the date of record and the date of payment.

Question

Quizplus · Accepted Answer

The date of declaration is indeed when the Board of Directors declares a dividend, creating a legal obligation for the company to pay it. This is a critical point in the dividend process because it signifies the company's commitment to distribute earnings to shareholders.

Which Statement About Cash Dividends Is Correct