Cash Dividend Affects Accounting Equation
Cash Dividend Declared And Paid Effect On The Accounting Equation / The Declaration Of Cash Dividend Affect The Accounting Equation / Dividends That Are Paid To Owners Would Affect Both The When Dividend is declared, then it takes some time to pay it to stockholders / shareholders i.e., the process of declaring and paying dividend to stockholders is not immediate. In case of Net Profit / Net Income for the period, the board of directors decide to declare the cash dividend to stockholders. At this time, it is the Liability of the company to pay its stockholders the amount of dividend for the period from Retained Earnings Account . Declaring and Paying dividend affects the both sides of the Accounting Equation. Example: On 20 th December, 2020, the board of directors of ABC Company decided to declare dividend of Rs. 6 per share for the year. The capital stock / issued capital is 1000 shares and the total amount of dividend must be paid on 25 th January, 2021 is Rs. 60...