Investor Glossary-dividends payableInvestor Glossary-dividends payableInvestor Glossary-dividends payableInvestor Glossary-dividends payableInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Dividends Payable

The HTML to link to this page
 

Dividends payable is a liability of the firm for the cash dividends owed to shareholders. Suppose a company's board of directors on August 1 declares a quarterly dividend of $1 for each of the firm's 500,000 outstanding common shares, which is payable on August 25 to shareholders of record on August 15. On August 1, the dividends payable account is credited for $500,000 and retained earnings is debited for $500,000. On August 15, dividends payable is neither debited or credited. When dividends are paid on August 25, dividends payable is debited for $500,000 and cash is credited for $500,000. Because dividends are usually paid quickly, dividends payable is classified as a current liability on the balance sheet. Dividends payable is different than other current liabilities, since dividends payable represents funds the owners owe to themselves. Nevertheless, from the standpoint of the company as an economic entity, dividends payable do represent a legal obligation like any other.



Rate this dividends payable definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: ex-dividend, debt service coverage, required rate of return, annual return, FTSE, margin rate, 1035 exchange, Key Rate Duration, FICO score, inflation, quality assurance, option premium, 1031 exchange, current ratio, minority interest, wholly-owned subsidiary, average price per share, phantom income, VIX, EBITDA, in escrow, risk management, diluted share, deferred tax, ex-dividend date, reverse mortgage, deferred revenue, cancelled check, real GDP, per diem, command economy, stock split, stock market close, Zero Cost Collar, dividends payable, class C shares, retained earnings, balance sheet, labor relations, liquidity ratio, APR, 144a, open position, covered put, implied volatility, limit order, 401a, LIBOR, irrevocable trust


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use