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slaterlyork
Level 1

In Category what is the difference between Dividend and Dividend payable?

In Expenses
1 REPLY 1
MirriamM
Moderator

In Category what is the difference between Dividend and Dividend payable?

Hi there, @slaterlyork.

 

Let me share information about how Dividends works.

 

A dividend is an equity type of transaction and not considered as an expense. It is a distribution of a firm’s accumulated earnings. Thus, dividends are treated as a distribution of the equity of a business. 

 

While Dividends Payable is a liability account that comes into existence when a company declares cash dividends for its stockholders. It is an amount of the after-tax profit a company has formally authorized to distribute to its shareholders but has not yet paid in cash. 

 

To learn more about the retained earnings account, see below links:

If there's anything else you need help with, let me know by commenting below. I'd be glad to help. Take care.

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